Sometime in January 2022, the value of a collection of 8,888 NFTs under the Frosties initiative plunged to practically zero almost overnight, marking the first large “rug pull” of the year. The project, which raised $1.3 million from investors through its NFTs, is one of a growing number of crypto-related crimes that have been reported around the world in the last year.
What is a rug pull? We will discuss how rug pulls happen with cryptocurrencies and NFTs, as well as break down the many indicators of a rug pull to help you spot them and avoid being duped.
What is NFTs Rug Pull?
A rug pull is a social media hoax that promotes a crypto coin. The scammer sells after driving up the price, and the price usually drops to zero. A rumour circulated in 2021 regarding a “genuine” NFT rug pull. NFTs (non-fungible tokens) are links to digital art held somewhere on the blockchain. Someone tracked down the location of a file and replaced its contents with a rug image.
Top 6 NFTs Rug Pulls
In this post, we’ve compiled a list of the best NFT rug pulls or projects where the founders have taken investors’ money and failed to deliver on their claims.
The total amount of money stolen in the process determines the ranking.
1. Evolved Apes -$2.7 million
Evolved Apes was a 10,000-piece NFT project that promised funders a game in which the characters would battle it out for prizes.
However, as with other NFT scams in the last year or two, the developers vanished after the sale and removed the project’s social media profiles.
The unknown developer known only as ‘Evil Ape’ took almost $2.7 million in total, including monies intended for project-related expenses such as marketing and game development.
It was eventually discovered that competition winners had not received their NFT award and that the artist had not been compensated.
2. Baller Ape Club ($2million)
Baller Ape Club was a collection of 5,000 NFTs sold for 2 SOL apiece, with a total value of roughly $2 million at the time.
The project administrators erased all linked social media profiles immediately after the sale, as is typical of these types of scams, leaving no traces.
Investors flocked to social media to vent their frustrations, but it was too late to get their money back because the bitcoin had already left their accounts.
The wallets that were implicated have been discovered, and the matter is being investigated by blockchain analysis teams. The investors, on the other hand, are unlikely to ever see their money again.
3. Frosties NFT ($1.3million)
The Frosties NFT project promised a staking feature that would allow NFT owners to receive a piece of the generated money, a metaverse game, and much more to their investors.
However, investors learned that the developers had removed all of the project’s social media profiles shortly after the 8,888 pieces were sold out.
Indeed, scammers frequently utilize this strategy to prevent authorities from tracking their whereabouts and to disrupt any attempts by community members to band together to discover the perpetrators.
The crooks got off with $1.3 million in total, and it’s unclear whether the investors would ever see their money again.
4. Fake Banksy NFT ($336,000)
For those unfamiliar with Banksy, he is a pseudonymous British street artist whose work has previously sold for tens of millions of dollars.
The mysterious artist’s true identity is unknown, adding to the mystery and fascination surrounding the artwork.
Banksy, like other artists, has a website where he displays his work, and here is where the swindle took place.
Pranksy, a well-known NFT collector, was perusing a Discord channel when a link to Banksy’s website was sent, notifying him that a new page called ‘NFT’ had been created.
A link to a website that was hosting an auction for an NFT dubbed Great Redistribution of the Climate Change Disaster was put on the page.
Pranksy decided to buy considerably above the others after some research, and the auction concluded shortly after.
He paid roughly $336,000 for the NFT in total, but when he noticed that all traces of the auction had vanished from the Banksy website, he began to wonder if the listing had been false.
5. W3M ($225,000)
Web3Memes (W3M), a meme coin that runs on Binance Smart Chain, has had its liquidity pools drained of about 625 Binance Coins (BNB), roughly $235,000, by its developers.
W3M was founded on February 23, 2022, and was quickly listed on BSC-based PancakeSwap. W3M had over 1,800 transactions in just a few hours, with over 1,000 persons holding the coin.
In a typical rug pull, its unknown developers yanked its trading liquidity five hours after it was issued.
6. Iconics -$140,000
Investors were meant to receive 8,000 randomized 3D artworks from Iconics, an NFT project based on the Solana blockchain.
2000 pieces were sold for 0.5 SOL apiece in the pre-sale, which was worth roughly $140,000 at the time.
Rather than receiving the artwork promised, investors discovered a random collection of emojis in their wallets, prompting them to vent their frustrations on social media.
Shortly after, the project’s supposed 17-year-old artist deactivated the Iconics’ Twitter account and blocked the Discord group’s chat feature.
Because cryptocurrencies are anonymous, it is unclear whether the criminals will ever be apprehended and held accountable for their acts.
Related: Top 5 NFTs MarketPlaces
How To Spot NFTs Rug Pull
Risk can be reduced by simply conducting a Google search and checking out the social media links for a specific NFT project.
If you search the developer’s name on LinkedIn and look at more than the first link that pops up, you’ll probably find out if the developer is anonymous and uses a pseudonym.
Aside from that, before investing in a project, it’s usually a good idea to do some research on the founding team. While some anonymous teams do exercise, it is far more dangerous.
Checking to see if the creators keep their commitments, such as gifts, is crucial. Some rug pull projects may not even follow through on their initial pledges to give away particular items (even before the mint).
Furthermore, if the website appears to have been thrown up quickly or contains faults, this is a huge red signal. It’s unlikely that a project will deliver on its claims if it has spelling problems and loads slowly.
When it comes to detecting a rug pull, social media can be a useful tool. This is a red flag if the social media has a little following on Twitter but a large following on Discord or Telegram.
Conclusion
Purchasing NFTs is not the same as purchasing on Amazon. Nobody is keeping an eye on you. There are no returns or guarantees, and there are no safeguards.
Scammers are aplenty in the NFT sector, and many of them use YouTube to vent and inform the public.
Investing in NFTs can be emotional, and the majority of projects fail. Nobody wants to talk about losing, but it’s an inevitable part of the game.
Few things are as fulfilling as selecting the proper project, being proven correct, and receiving a substantial return on investment. Despite the warning signs, some investors cling to the hope that their business will succeed at the price of their better judgment.
