‘People have been participating without understanding the risks’: Here’s what to know about cryptocurrency-based DeFi – CNBC

‘People have been participating without understanding the risks’: Here’s what to know about cryptocurrency-based DeFi – CNBC

Though they potentially have more access to resources, even billionaire investors aren’t immune to risk when it comes to decentralized finance, or DeFi.

That includes Mark Cuban, who revealed on Wednesday evening that he was trading a DeFi token from Iron Finance called titan that ended up crashing to zero in one day.

“I got hit like everyone else,” Cuban, owner of the Dallas Mavericks and an investor on ABC’s “Shark Tank,” tweeted on Wednesday.

At first, some in the crypto world speculated that this was the result of a rug pull, which is a type of scam where developers abandon a project and leave with investors’ funds. Iron Finance denied those claims. The project said in a blog post that the crash was due to a “bank run,” or panic selling, and the token’s algorithmic code.

Regardless, Cuban’s experience is a good reminder of how volatile and risky investing in crypto, and DeFi especially, can be. His takeaway: “Do your own research,” he told CNBC Make It.

Fraud within the space has recently surged; between January and April, $156 million was stolen in DeFi-related hacks, according to CipherTrace. DeFi fraudsters stole an additional $83.4 million.

And although it’s rare for coins to completely tank, like with titan, it’s still possible, and investors should be aware. “I think it’s really important for people participating in the DeFi
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