A self-described “doctor” has a lesson she’d like to teach investors about decentralized finance (DeFi), an increasingly popular lending sector that’s become a battleground against cryptocurrency-related fraud.
Even the most experienced DeFi players can find themselves wrong-footed by hacks and fraud. Yet retail investors in the sector are hungry for basic fraud protection, giving rise to a new breed of “vigilantes” and startup businesses to address the demand.
Over a year ago, one Silicon Vally couple lost around $200,000 to a DeFi scam. Assuming the online pseudonym “The Rug Doctor,” the wife — who spoke to Yahoo Finance on the condition of anonymity — now runs a crypto rating firm that warns when new projects might scam investors blinded by the promise of big returns.
In late 2020, a friend introduced the couple to DeFi, who had invested into cryptocurrency years before, and they quickly found DeFi compelling. The product offered variations on crypto lending where investors could reap yields anywhere from 50-300% APY.
Intoxicated by the returns from “staking” crypto with protocols, the couple quickly bit — and eventually discovering MoltenSwap, a project that promised an outlandish 3,000% annual percentage yield (APY).
“My husband promptly jumped all in, six figures of his money. He got scammed immediately and lost around $200,000. It was horrifying,” the Rug Doctor told Yahoo Finance by phone. Her pseudonym is a play on a term where crypto developers lure in…
