Fraudsters have been at it since Ancient Greece. In 300 B.C., a Greek merchant named Hegestratos committed the first documented insurance fraud. He took out a large insurance policy on a grain-filled boat that would supposedly transport grain from Syracuse to Athens. But Hegestratos actually planned to set sail with no grain, sink his boat, and recover a hefty payout for both the (sunk) boat and the (nonexistent) grain. Unfortunately for Hegestratos, the boat’s crew uncovered the scam and confronted him. Hegestratos ended up jumping overboard and drowned to his death.
Technology has changed dramatically since 300 B.C., but humanity has not. And as technology evolves, new opportunities for fraud arise. The invention of the telephone gave rise to telemarketer scams, while the adoption of email enabled phishing scams and instant notification of “foreign lottery winnings” across the globe. So it is with the explosion of innovation in cryptocurrency and decentralized finance, which has given rise to the increasingly common “Rug Pull.” The techniques are new, but the fraud is the timeless—a promoter lies about a product, gets investor buy-in on the product’s potential, dupes people into investing, and then abandons the project and rides into the sunset with investor funds.
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