Top 10 Biggest Rug Pull Projects In Crypto Market History
Rug pulls are a form of scam in which the team or founder behind the project suddenly abandons the initiative, attracts substantive investment, makes away with the money, and leaves the investors high and dry.
These fraudulent schemes often seem to emerge overnight, leaving little chance of identifying them ahead of time. Today, scam artists are extremely sophisticated and use methods that involve enlisting social media influencers to hype their campaigns. By co-opting figures in trusted digital spaces, credibility can be gained. Very high return rates are promised, or access is given to exclusive digital assets such as NFTs.
Another very common practice is to rig the price of the token or coin to mislead investors. For example, fraudsters suddenly inflate the price of any token to attract attention. Once this peak price is reached, they sell everything and reap large profits, leaving the investors with heavy losses.
This had happened quite a few times on DEXs in earlier cases when crypto rug pulls occurred, and the anonymity of transactions simply covered these perpetrators to quite an extent.
Read more: What Are Rug Pulls? Find Out Everything You Need To Know About The Rising Crypto Scam!
Now, let us see the biggest rug pull projects of crypto market history.
Onecoin is considered one of the biggest rug pull projects in the history of the crypto market. The project was founded by Ruja Ignatova in Bulgaria and raised $4 billion from numerous small investors as well as some large institutions.
From the very first lines introducing the project, Ruja Ignatova did not hesitate to announce that Onecoin would render Bitcoin obsolete. After seizing all the assets, Ruja disappeared in October 2017 without leaving any trace. She was subsequently placed on a global wanted list by the U.S. authorities.
Ruja also made history by being the only woman to be listed among the FBI’s most-wanted criminals, facing up to 20 years in prison. After Ruja disappeared, her brother Konstantin Ignatov took over but was arrested in 2019 on charges of fraud and money laundering.
Thodex is a Turkish cryptocurrency exchange that was established in 2017. In April 2021, Thodex suddenly disappeared with over $2 billion. The project’s founder, Faruk Fatih Özer, stated that the platform was experiencing cybersecurity issues and then also disappeared.
Immediately, Turkish authorities began investigating Faruk for fraud, arresting his employees, and seizing assets. Additionally, Interpol issued a global arrest warrant for Faruk.
In September 2022, Faruk was finally apprehended in Vlorë, Albania. According to several blockchain analysis firms, Thodex is responsible for 90% of the losses on the exchange. This incident also made Thodex one of the biggest rug pull projects of 2021.
In August 2021, Luna Yield was launched and was known as a DeFi yield aggregator. It conducted its scam just two days later. The total recorded loss from investors reached $6.7 million.
After that, all social media accounts of the protocol quickly disappeared without a trace. The team behind Luna Yield is believed to have used Tornado Cash to launder the stolen money through complex transactions involving WETH, WBTC, and LUNY.
To date, the whereabouts of the Luna Yield team members have not been discovered.
AnubisDAO is a dog-themed memecoin project launched on Ethereum. The project raised $60 million and promised to return the ANKH token to investors. However, the project then proceeded to withdraw all the liquidity, and this amount was transferred to another wallet address and disappeared within 24 hours.
This meant that the ANKH token became worthless as the current liquidity was reduced to zero. Previously, the project deceived investors by claiming to be a branch of OlympusDAO (OHM), a well-known DAO project in the market. However, the project did not even have a website or whitepaper, and its operations were only visible on channels like X (formerly Twitter).
In an interview with CNBC, an investor who lost $470,000 in the AnubisDAO project said he was interested in the project because it was a dog-themed memecoin similar to DOGE or SHIBA.
The Squid Game (SQUID) was introduced as a Web3 GameFi project deployed on BNB Chain in 2021. It was considered one of the most famous GameFi projects at the time, inspired by the wildly popular series of the same name that captivated the world that year.
Reportedly, the team behind The Squid Game earned $3.3 million from investors. According to Sodius Labs, up to 12% of the SQUID tokens on the BNB Chain network were a scam.
The team also employed various methods to pump up the volume and create artificial market capitalization to lure investors. A user live streaming on Twitch witnessed the market cap of SQUID plummet from $2.2 trillion to zero in a single red candle. This livestream was recorded by many and has become one of the most popular troll videos in the market today.
The Mutant Ape Planet (MAP) NFT collection was created by Aurelien Michel, a 24-year-old French citizen living in the UAE. Michel allegedly defrauded investors out of a total of $2.9 million.
This NFT collection was created to capitalize on the hype surrounding another popular NFT collection at the time, Mutant Ape Yacht Club. Michel promised investors that they would soon see profits and receive some exclusive perks.
On December 18, 2022, Michel travelled to Qatar to watch the FIFA World Cup final and secured a prime seat to record goals by player Kylian Mbappe while enjoying his vacation. Following clues from a video posted on Michel’s Instagram, on January 4, 2023, he was arrested by New York police upon arriving at the city’s airport.
ZachXBT also mentioned on platform X that Michel is the founder of another rug pull project called Crazy Camel Club, which scammed investors out of $1.6 million.
From its launch, Stable Magnet introduced its customers to a mechanism of high-interest returns when they deposited stablecoins into the platform. It was recorded that in June 2021, this project conducted a rug pull, resulting in a loss of $25 million.
Immediately afterwards, cybersecurity police intervened and accused the team behind Stable Magnet of being responsible for this fraud. The criminal group was quite sophisticated, manipulating smart contracts to deceive blockchain experts such as Etherscan, making the project’s smart contracts appear legitimate.
In January 2022, the criminal group was arrested in a Chinatown neighbourhood in Manchester, thanks to the efforts of a “white hat hacker” who tracked them through cyberspace. After confessing, the criminals cooperated with local police to return the remaining funds to investors.
Plus Token is a Chinese crypto project. From May 2018 to June 2019, this project defrauded investors out of $2.25 billion (equivalent to 14.9 billion yuan) by promising huge future profits.
Since the time of the fraud and coinciding with the uptrend season of 2020-2021, the total value of the losses amounted to $11 billion. The founder of the project, Chen Bo, and his accomplices fled to Cambodia and were officially arrested in June 2020.
Chen Bo and 15 other project members were sentenced to 2-11 years in prison and fined between $100k and $1 million. This case is considered the largest in the financial market in China.
Wo Token is a crypto exchange that was introduced as having an automated trading BOT with algorithms refined from the top trading methods in the crypto market. The project targeted many investors at the time who wanted to trade crypto but lacked analytical skills. However, in the end, it was all a Ponzi scheme.
As of May 2020, the project had defrauded 715,429 users, resulting in total losses of $1.1 billion (equivalent to 7.8 billion yuan). With this scale, the project is considered the second-largest scam in the history of China’s crypto market.
The founders of the project, Gao Yudong and Tian Yongbo, both had previous convictions for financial crimes, but they managed to deceive investors with their profile introductions. These two, along with four other project members, received sentences ranging from 2.2 to 4.8 years, and only $63.6 million was recovered from the total amount defrauded.
Bitconnect was a notorious Ponzi scheme from 2017 to 2018, and notably, not only global investors but also many investors in Vietnam fell into its trap.
At that time, Bitconnect continuously promoted and advertised its high-profit trading BOTs and lending schemes with interest rates of up to 3,700% per year. These schemes were executed by recruiting new investors to pay returns to older investors.
Additionally, Bitconnect manipulated the price of its BCC token on exchanges, attracting even more investors wanting to own the token. However, due to its rapid growth, the project also attracted the attention of authorities regarding its legality.
Soon after, the project’s BCC token was continuously delisted from exchanges, and the project’s website ceased operations. The founder of Bitconnect disappeared with an estimated $2.5 billion. According to Reuters, Satish Kumbhani, a 35-year-old from India, is the owner of Bitconnect and is still on the global wanted list but has vanished.
In September 2021, the SEC filed a lawsuit against the founder and members of the project, accusing them of fraud. Several other project members confessed to their crimes during a sentencing trial in San Diego, USA, in November 2021.
Read more: Crypto Insider Trading Scam: How A Crypto Exchange Insider Rigged The Market
Various tell-tale signs can help spot a crypto rug pull the project, including:
The first major red flag is an anonymous development team. Legitimate cryptocurrency projects are usually identified and tagged to a real team with established social media accounts. An anonymous team with newly created social media accounts may be indicative of a scam.
Good projects will lock liquidity to protect investors’ funds for some time, ensure liquidity for transactions is stable, and protect them from sudden withdrawals. Not having a liquidity lock is an enormous red flag.
Any crypto project should have openness as an absolute requirement. Projects that do not open their source code are less transparent and could be hiding vital details about their operation.
Most established projects go through third-party audits, which help ensure the smart contracts are secure. Those who bypass this process raise the risk to the investor.
In case of custody by a few large amounts of tokens, then those major holders can sell it off and break down the value of the project, thus harming the rest of the investors.
A project website often speaks oodles about the seriousness and professionalism involved. A website with a very minimal design and riddled with noticeable spelling errors certainly has to be an indicator of a lack of commitment or even fraud.
Rug pull is one of the popular scams in the crypto market. Make sure to, if new, be careful to clearly learn about any project before they enter the market. In this article by Coincu, you learned what the biggest rug pull projects in crypto markets are and how to recognize them if one is crossed. Be a smart investor and be conscious of all potential risks. We hope this knowledge helps your trading process.
| DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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