Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. Today we are going to take a look at some of the biggest NFT rug pulls in history, which is a follow on from a previous post I made on how Crypto & NFT Scams are a Crime. I will be outlining some of the biggest rug pulls that took place, how they happened, and what the consequences were for those involved on both sides of the scam. I hope you enjoy it. These are not ordered in terms of the biggest, so without any further ado, lets jump straight in.
1. Frosites
The first project I will look at is Frosties NFT, which was a promising project which promised huge plans for their investor. This would include a staking feature which would allow each NFT owner to earn a share of the generated revenue, along with a metaverse game and so much more. The familiar story of a project promising so much yet failing to deliver. It failed to deliver big time. Ethan Nguyen and Andre Llacun, the creators of this project, managed to earn more than $1.3 million when they sold their product. They had created 8,888 pieces and sold them in January 2022. They project sold out, with big enthusiasm around it all, but soon the community had the realisation land upon them. Just hours after selling out the developers had deactivated all of the project’s social media accounts. TO add to the insult of it all, they had been working on another project which was due to be released on March 26th 2022. The most interesting thing about this case is that both developers were arrested and issued with a sentence of their crimes from the DOJ, after the had been found via their ID registration on a crypto exchange, where they had transferred some of the funds. All that money and found out by KYC. Both of them have been charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, which are crimes that carry a maximum sentence of 20 years in prison.
Below is a selection of the Frosties NFTs, which has been shown on the CoinMarketCap
2. Big Daddy Ape Club
This was supposed to be a collection of 2222 Ape-themed NFTs based on the Solana Blockcahin, which would be sold on the Solanart Martketplace. This turned out to be the largest rugpull in the history of the Solana Blockchain and it was exceptionally painful for those involved in the community. The reason for this is they never even recieved an NFT for their SOL. The developers managed to get over 9,136 SOL, roughly $1.3 million at the time, to pre mint the collection. What happened after was a rude awakening for the community, as in the hours leading up to the mint on the 11th of January 2022, Big Daddy Ape Club locked and then decommissioned the project’s Discord, quickly followed by the Twitter and project website disappearing. Nobody got an NFT, and it really annoyed to wider NFT community as the project had been verified by Civic, a decentralized identity verification company. The only decent thing from all is was that Civic's CEO Chris Hart, along with the rest of Civic, began working with law enforcement to apprehend those responsible for the scam.
An example of what was expected from the collection, as shown on the news.coincu.com
3. Baller Ape Club
This was a collection of 5000 NFTs which were sold at a starting price of 2 SOL each. That equated to around more than $2 million in total at the time. It was called the largest known NFT scam to date by the Department of Justice, but it did not work out like the creator had intended. After the sales on October 1, 2021, where the 5000 NFTs sold out the developer team deleted their Discord, websites, and Twitter accounts. A developer of the project, Vietnamese national known as Le Anh Tuan, was charged with conspiracy to commit wire fraud and conspiracy to commit international money laundering by the Department of Justice. Tuan had made off with the money generated from the sales and traded it into various different cryptocurrencies. They were then transferred across a number of blockchains and spread out to different wallets, which is a process known as “chain-hopping.”
The image below is from SolSea.io showing a collection of the Baller Ape Club NFTs available for purchase.
4. Evolved Apes
This was a collection of 10000 NFT pieces which promised investors of a game which would allow the characters to battle each other in an aim to win rewards. It sold out in just ten minutes upon minting on 24th of September 20201, and just like so many other NFT rug pulls, soon after minting the developers disappeared and absconded with all the funds and social media accounts associated with the project were deleted. The developer who was only known as "Evil Ape" managed to steal around 798 ETH, roughly $2.7 million at the time, including funds which were intended for project related expenses such as marketing and game development. To add further insult to the project, it was revealed the artists were never paid for their artwork. The value of the NFT dropped sharply and much lower than their minting price, with trading activity slowing immensely.
Below is an image of some of the NFTs as shown on the Vice.com
5. Azuki
While this one is not technically a rug pull in the traditional sense, it very much had the exact same effort for investors. Well known to those within the crypto and NFT space, Azuki is a collection of 10,000 avatars. Owning one give access to The Garden, a place where artists, builders, and crypto enthusiasts are able to meet and create decentralized products together. It was founded by Zagabond, and on 9th May 2022 he revealed in a blog post that he had been involved in previous projects which were later abandoned, CryptoPhunks, CryptoZunks, and Tendies. He explained that he built Azuki on what mistakes he had learnt from those projects, but immediately panic took place within the community. Holders were shocked and feared another rug pull, therefore a massive panic sale took place and it resulted in the floor price crashing by almost 50% in a couple of hours. The market cap of the project plummeted by hundreds of millions as a result of this, leaving the project basically dead in the water. While it was not a typical rug pull, speculation that he revealed this info with the intention of causing panic to crash the project from community sales is a very real possability. Either way, Zagabond made his millions off the project and plenty of investors lost out due to his revelation. It currently trades for around 8ETH after reaching a high of over 30ETH in April and early May 2022.
A selection of Azuki as shown on NFTNow.com
6. Iconics
Possibly one of the cruellest and harshest rug pulls I have encountered, Iconics was an NFT collection of over 8,000 randomized 3D artworks launched upon the Solana Blockchain. The project was hyped and managed to sell roughly 2000 pieces at 0.5 SOL each in the pre-sale. This equated to around $140,000 at the time, a nice return for the creator. The investors were excited and awaiting their new NFT, but they never got what they were promised. After the mint on September 30th 2021, instead of the randomised artwork they found a random collection of emojis as their NFT. Soon after the communities Discord had its chat feature disconnected and it was the end of the project. Investors were baffled, and while it may have seemed like a somewhat funny idea as they did receive random art, it was far from what was expected. The Twitter account was also deleted and that was it, with the alleged 17 year old creator $140,000 better off and gone. The reason I saw alleged is because the creator claimed to be a 17-year-old artist working with his dad to create this work. It seems very unlikely that was the case, and while the community went to Twitter to exclaim their outrage, there was little that could be done. A harsh lesson learnt for all involved in the project, that even a seemingly innocent kid working with his dad might just be an image they wish to sell you to lure you in.
Below is an image from NFTEvening.com shows an example of the NFT the community received.
7. Pixelmon
While this one is not technically a rug pull in the traditional sense, it was possibly one of the worst NFT projects which produced work that I have ever seen in my life. The mint, which began in February 2022, was done in a Dutch Auction style starting at 3 ETH and reversing down. This mean that the team pocketed $70 million from the mint alone, without adding on secondary sale to their income. The founder, Syber, was accused of provifing poor quality in game art and it was discovered the art was created by people hired from Upwork, leading to claims thats why it was so low level. On top of this, over 5% of the funds raised, roughly 400 ETH (over $1,000,000), was spent on a shopping spree by Syber in OPENSEA which that included the purchase of BAYCs, CloneX, Azukis, Invisible Friends and more. In their defence, the developers claimed the "founders and projects always take a % for working on their project.” Fan in the community were far from impressed, the founder tweeted “The Pixelmon reveal was unacceptable. This is what our Pixelmon look like in-game (attached images of decent art). Our NFT art failed to reflect this. Despite the fud, I will not go anywhere. The goal hasn’t changed. The funds will still be used to build our game. I will see this project through.”
Below is an image from Trust Wallet's page on showing what fans expected, and what they actually got.
8. Raccoon Secret Society
This was possibly one of the strangest and most twisted rugs I've seen to date. The developers decided to basically kill the project, claiming the Raccoon NFTs were sick and it was the community who killed them. At the time, Racoon Secret Society had a trading volume of 191 ETH or almost $600,000 over the last 30 days in early September 2021. The developers transformed the NFT Collectibles into bones, with the developers revealing “All this time, we were working on this project with just one goal. To show people what they are actually buying when they click that “mint” button. All raccoons are dead now, and you – the “NFT community” were the ones who killed them.” They went on to discuss the “vulnerability” of the smart contracts used to code the NFT Project, and it somewhat seemed like a sick joke on those involved in the NFT space. The creators eventually handed over the project to the community for them to drive it forward, after making sure they had made as much as possible from it.
Below is an image of what the Raccoon Secret Society looked like, as shown on NFTEvening.com
So there is eight different projects which in one way or another managed to rug their community out of money. Its a sad sight to see and really shows the extend of how far people can go in terms of creating artwork just to scam their users in the end. Many would argue they could have made much more money by actually investing and creating all that was promised to the community before the sale and eventual rug, but often these people just prefer to make a ton of money and be done with it. I'm sure there have been plenty others which also took place, but I think this is a good list to show people just how many different tactics developers will have when trying to rug their community.
I hope you enjoyed the article and were not an unfortunate investor in any of the above projects. Have a great day.
CryptoGod-1.
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