Latest Crypto Rug Pulls
But unless you have tons of money sitting around to throw away, it’s best to stay on the platform you trust. A legitimate crypto often has at least tens of millions of dollars in its network, even if it’s not one of the most popular. Not to mention they usually have a fair amount of tokens locked in for certain durations.
Another way to pull the rug is by disabling buyers’ ability to sell. Malicious actors can add code to their token’s smart contract, which doesn’t allow users to sell back their tokens on DEXs. Knowing the signs of a potential rug pull can save you a lot of financial dilemmas. Unless you’re an experienced trader who’s spent years in the game, avoid venturing too deep into the DEX space.
While it’s not unheard of for people to use pseudonyms in cryptocurrency, reputable developers often have websites and references that can establish their credentials. Investors can protect themselves by choosing established cryptocurrency projects, making sure the code of any new project has been reviewed and verifying the developers' identities. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. Popular instances include the Squid game crypto fraud, in which the founders inflated its currency and then vanished with $3 million in investor funds. The value of a coin may climb in hours, signaling a possible rug pull.
This should provide some comfort to the victims of crytpo scams such as rug pulls. For those not prepared to invest in DEX-based coins, trusted cryptocurrency platforms conduct a thorough vetting process before hosting any coins on their platform. While risks do still exist, some relief can be taken from the fact that some of the due diligence has been undertaken for you. Recent news has again drawn attention to the world of cryptocurrency as fraudsters exploit unwitting investors looking for the next astronomically high returning altcoin.
Another indicator that a project is unruggable is if the team relinquishes custody of any tokens received during a presale. Bitcoin stays in the headlines when prices continue to fall and rise weekly. Developers who prefer hiding behind pseudonyms might be planning to evade legal follow-ups once they have fleeced investors. In the same year, Faruk Fatih Özer, the founder of Thodex, fled to Albania with an estimated two billion dollars in customer funds after the DEX was suddenly closed in April. Their customer base of 390,000 people is the reason they were able to get away with so much money. Social media and crypto influencers may have a significant impact on the enthusiasm surrounding a token or cryptocurrency.
Yet, while this isn’t the first “rug pull” to target both new and veteran investors in the NFT space, the DOJ’s recent bust against Nguyen and Llacuna is a first. As a result, the event certainly raises a lot of new questions about the legal landscape. But to understand the legal significance of this event, we need to dive a little deeper into the nature of this specific kind of crypto and NFT scam. At this point, if you want to be involved in the NFT ecosystem, you need to know what NFT and crypto rug pulls are and how to protect yourself.
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DEXs, as opposed to centralized cryptocurrency exchanges, allow users to publish tokens for free and without audit. Token creation on open-source blockchains such as Ethereum is also straightforward and free. The developer gives themselves a bigger portion of the project.