This week has been all about rug pulls. Once I managed to create my own token called the “PandaToken“, I realized that how easy it is for someone to execute a rug pull. On the other hand, why is it so difficult for the unsuspecting investors to differentiate between a scam and a legit crypto project. As a result, I started uncovering the modus operandi between these scams. You can explore more on what a rug pull is here and what are the various ways to spot one here. For this one, we shall discuss the infamous top 3 rug pulls of 2021. Let’s get started:
A. Squid Game Token:
I want to start with a scam that is still fresh in our memories. More so because one of my friends invested in it as well. So, that friend of mine is a huge fan of Korean TV shows. While I despise watching shows by relying on dubbing or sub titles, I fell in love with Squid Games almost instantly. There was something unique and mysterious about this show.
As it turns out, I was not the only one. Entire world was hooked to this show at once. Converting TV shows into games and vice-versa has caught people’s eyes since the time immemorial. So when something like Squid Game was supposed to be converted into a game, everyone got so excited.
Just to put cherry on the top, GameFI space was already exploding when this came out. Let’s add a little more thrill to it. It was the first ever GameFI project on Binance Smart Chain or BSC.
Hopefully, you get the idea why was an epic FOMO trail fired off when this project came out from the hoods. So trading at a measly $0.06 on 27th October, the project had already risen up to $32 within 3 days. However, it was nothing as compared to what future held for this token.
On 1st November, the pump of epic proportions began:
Prices stood at $38 as of 6am London time on Monday morning — accelerating to $90 by 7am, $181 by 8am, and $523 by 9am.Just 35 minutes later — at 9.35am — SQUID appeared to hit highs of $2,861.80. A surge of 7,500% in three-and-a-half hours is unheard of… even in the notoriously volatile world of cryptocurrencies.
But then, the inevitable happened. In less than 5 minutes of time, token crashed to Zero. Yes you read it right. A 2.5 Trillion Dollar Market Cap Crypto falling to zero within a few moments. Welcome to the world of crypto.
As I explored on multiple forums, developers used code flaw method to conduct this rug pull. Which meant that no one was allowed to sell their tokens without the administrator permission. Therefore, everyone who entered it got stuck in perpetuity.
Within a few minutes of this incident, all the social media accounts and official website of the project was taken down.
If you have ever watched old school Bollywood movies, you’d understand this one pretty easily. See, as the mankind evolved and law and order strengthened, the biggest conmen were the ones who could execute a robbery with no one batting an eye. However, in older times, there were dacoits. They would come with big guns on their horses to conduct a loot.
Why am I suddenly talking about this? Because team behind Amplyfi.Finance seems to be an amalgamation of both. They conducted a loot in the day light and then hid themselves behind the veil of an unprecedented hack. Read on:
After stealing about 2500 ETH from investors ($10m at that time), the team came out and gave the following statement:
“Apparently, one of the devs compromised wallet and was able to use a little-known vulnerability in compiler itself. Devs are receiving fair amount of threats, so we decided to terminate the project”
This was posted on their website along with a message in the bold: AMPLYFI contract was hacked.
How convenient right? Investor rationale behind accusing the entire team for this alleged rug pull was that social media accounts and chats were also deleted at the same time. If contract was hacked, why was social media taken down?
C. Meerkat Finance:
The first day of any new venture or any sort of landmark event is celebrated wholeheartedly in India. There is an auspicious angle attached to it. Well, if Meerkat Finance was an Indian project things would have taken a very humorous route. Why? Because project founders allegedly exited on the very first day of the launch.
On March 4th this year, DeFi yield farming project Meerkat Finance reported a hack amounting to $31 million one day after it launched on Binance Smart Chain. However, reports suggest that it was indeed a rug pull and exit scam executed by the team.
Specifically, the hackers ran off with 73,653 BNB and 13 million BUSD and transferred to multiple blockchain addresses, which amounts to $31 million. These persons modified Meerkat Finance’s smart contract which contained the funds to accomplish the said act. Interestingly, they used the original deployer’s account of Meerkat.
The point here is not to scare you with these scams and rug pulls but to educate you on how they are conducted so that next time when you are DYORing, your due diligence should be able to take care of this as well.
I always suggest that if you are new to the crypto investing world, try venturing into centralized exchange like CoinDCX first. It is user friendly and has audited projects listed.
Although each one of these scams are outright devastating for the community. Especially for the ones who lost their money in it. But which one according to you took the goriest shape?
Until Next Time. . .
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Btw, if you are a seasoned trader or just testing the waters with derivatives, here’s an exchange specifically meant for that. Head over to MCS using this link. Still not convinced? Join the vibrant community that is talking about MCS on Telegram, here.