It is no longer news that many investors have suffered huge losses at the hands of greedy developers and team members who have through, Assisted Flash Loans, Rugpulls, etc have swindled money from investors. To say that these crypto crimes can be penalized comes with the task of determining the best approach to it. There are several factors to be considered here,
The fact is that one can only trace the wallet address where the money was moved but not the individual involved in it.
The presence of mixers makes it possible for people to exchange and move stolen funds without a trace.
The challenge of constituting a body that will be responsible for this, especially when cryptocurrency is a global thing. If there is a law in New York against crypto scams, can the law apply to developers who are not in New York, especially when their scam activities affect investors from New York?
If KYC and Doxxing are enforced on upcoming project team members, how will the details submitted be verified considering that some countries are still not interested in anything relating to cryptocurrency, and it is only through their database can the authenticity of submitted details be verified?. If a developer participates in any form of scam, can he be traced easily by local authorities, especially in underdeveloped countries?.
For me, penalizing crypto scams, especially the ones from developers and team members, will only be possible if countries can come up together and constitute a body independently yet collectively. What do I mean?
Having a general body where there will be a leadership system may not be feasible as many countries won't want to subject themselves to the leadership of another country especially the fact that it deals with finance. The solution is thus, countries should first have regulations for crypto investment in their country such that projects emanating from their country will have to pass through KYC verification locally. This way, if other investors outside the said country are scammed, there can be communication and contribution from countries towards the arrest of those involved.
But then, the question is this, are countries ready for cryptocurrency? Can they allow it to be part of their financial system bearing in mind the fact that they do not have full control over it?.
Since cryptocurrency is growing with each passing day, I believe that cryptocurrency scams from projects can be reduced with time. In general, Cryptocurrency scams can't be eliminated because as more measures are being put in place against scams, more loopholes are being created through them.
Another thing that can help in curbing scams from developers and bad players is EDUCATION. Many people fall into some of these scams because they are not knowledgeable enough. Presently, certain signs expose projects that may rug pull. Enlighten investors lookout for these signs before investing in any project. Some of them include both not limited to,
A single wallet has more than 50% of the total token supply.
Lack of use cases for the token. Although some with use cases also use rugpulls, it is something that tells if the project has plans to stay.
When the team members are unknown and have no previous crypto work experience to show.
Their social accounts can also reveal some information.
If people are enlightened, I am confident that people will learn to make proper research before joining any project.
Decentralization is very beautiful but it has its flaws. This is what these bad players capitalize on in carrying out their scam activities. Sometimes I wonder why mixers exist. Many stolen funds have been buried through them. If mixers should be regulated, bad players won't have enough confidence in their stolen funds.
Again, projects also need to monitor their members because some flash loans and hacks come from an insider offering help to the scammer.
Finally, the war against cryptocurrency scams won't be won easily. Presently, the solution is for investors to protect themselves while waiting for Government intervention, which may or may not come. We should also ensure to know when to take profit from our investment. It is always good to monitor the available liquidity in a pool. This helps to know when the pool is increasing or decreasing. When there is an increase in a pool and there is no observable event that propels the increase, it is advised we consider taking out some of our funds.
This is not financial advice. It is a personal opinion that is not devoid of errors or criticism. Ensure to do your research.