Rug Pull Cons are Killing the NFT
Cryptocurrency has evolved to the point where a subset of FINcriminals now own digital street cred for inventing crimes unique to cryptocurrency. Case in point, the Rug Pull, a digital crime that cost crypto investors an estimated $2.8 billion in 2021, an increase of over $2 billion from 2020. According to a report issued in December, the entire amount of illicit cryptocurrency generated worldwide from scams in 2021 was $7.7 billion, of which rug-pulls accounted for 37 percent! I’m guessing the rug pull has your attention now?
Perhaps you are wondering what it is and how it works, but mostly why has the rug pull suddenly become the crime du jour in a market full of dodgy, digital crimes? Also, what is the impact of this financial scam on the cryptocurrency market at large? For example, NFT auctions and investments in NFTs could suddenly become a thing of the past if more rug pulls like the Frosties case, which cost investors’ $1.3 million, start to appear on the radar.
The Rug Pull, Explained
According to Business Insider, a group of developers created an actual collection of ice-cream themed illustrations called Frosties that were backed by 8,888 tokens and put them up for public sale in early January on OpenSea (a decentralized exchange or DEX) as NFTs. The Frosties tokens were a hot buy and sold out within an hour of the collection dropping, generating an estimated $1.3 million (USD) from investors.
CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.