Rug pulls are like train wrecks — hard to look away from. Sure, they are a stain on the crypto world, but if you don’t learn from history, you’re doomed to repeat it. Hence, our list of the top five rug pulls of 2021.  Covered: Fiat Rug Pulls Eternal Beings Luna Yield SquidGame Snowdog Iron […] The post Top Five Rug Pulls Of 2021 appeared first on CryptosRus.

Top Five Rug Pulls Of 2021

Rug pulls are like train wrecks — hard to look away from. Sure, they are a stain on the crypto world, but if you don’t learn from history, you’re doomed to repeat it. Hence, our list of the top five rug pulls of 2021. 

Covered:

  • Fiat Rug Pulls
  • Eternal Beings
  • Luna Yield
  • SquidGame
  • Snowdog
  • Iron Finance

While 2021 was a year of crypto cheer, there are always humbugs beneath the rugs.

Before we start our list of infamy, we have to shout out the honorary Fiat rug of the year, and that is the Turkish Lira. While the Turks are known for their hand-woven rugs, unlike those, this rug wasn’t a pretty sight. (Can someone tell Elizabeth Warren that the Lira isn’t DeFi?) 

Funny enough, the Lira bounced a lot yesterday. Nevertheless, inflation is still up over 21% in Turkey with interest rates at zero. This is the greatest example in 2021 of a Fiat rug pull by a 1st world country. The Lira is still down more than 40% against the dollar year to date.

us dollar/turkish lira as of 12/20/21

Now, let’s move on to the noteworthy crypto rugs of 2021.

5. Eternal Beings NFT’s

We couldn’t leave an NFT rug off of the 2021 list, and this one had added intrigue of celebrity scandal. Lil Uzi Vert, a popular rapper, actually was the man behind the rug it appears.

After shilling the Solana NFT’s on Twitter to his 8 million followers, the collection of 11,111 “generative alien avatars” sold out and Uzi immediately deleted his posts and never touched the project again. The 43,000 strong Discord server panicked, and their panic was warranted.

It was a “social rug“, and following this, the price tanked for Eternal Beings. They were minted at 2.5 SOL each, and Uzi put himself in hot water by tweeting that they will “easily” surpass 6 SOL. They have been trading at ~0.13 SOL ever since. Everyone cashed in of course except the minters, the retail like you and I.

The project hasn’t tweeted since a few days after Uzi rugged his socials. According to their “roadmap”, Uzi was supposed to do a live performance for Eternal Beings with backstage access for one holder. That hasn’t happened as you may have guessed. It most likely never will.

It was a unique situation; NFT’s, celebrities, and no indemnities.

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4. Luna Yield 

This was Solana’s very first rug pull. Solana was the story of the year, but it wasn’t smooth sailing for everything related to the smart contract protocol.

Luna Yield launched via SolPad in August of this year and a few days later the project went dark and disappeared with more than $6.7 million worth of crypto.

Because the Yield Farming aggregator had the backing of SolPad, which was seemingly reputable, investors were comfortable. But three days after the IDO, Luna Yield sent the funds that it raised to Tornado Cash to cover their tracks and make it untraceable, and voila, it was over.

The user funds from the IDO were locked into the protocol, which is the danger of smart contracts. When you trust a smart contract, you’re not trusting code, you’re trusting people. Users who tried to un-stake were getting failed transactions because the contract had already moved all the funds out.

You can see all the movement here. The project was closed source, so their code was neither audited nor open source. This is a huge red flag. Being launched on SolPad apparently made users complacent about this fact. It was a vintage rug, wipe out the funds of users and disappear into the night.

It was not a unique situation; closed source, tornado cash, and no remorse.

3. Snowdog 

We covered the Snowdog rug in late November, which was the largest pull in the history of Avalanche. SDOG was a meme coin that rugged for over $30 million, making it one of the largest of the year. The team admitted they had “f**cked up”. But that dog doesn’t hunt.

At the same time, insiders tried to use mental gymnastics calling it “game theory gone wrong.” But the truth is, Snowdog promised massive returns on a $40 million buyback of Snowdog tokens. To do this, they migrated all the liquidity from AVAX’s TraderJoe DEX to SnowSwap, a DEX and AMM they admittedly copied/pasted from Uniswap code.

The contract with the funds had a function called a challengekey, which meant users couldn’t access the contract for the buyback on the new DEX without it. Right when the buyback launched on their copy/pasted AMM, an insider liquidated the entire treasury which was supposed to be used for the buyback. The token dumped >90%.

As can be seen above, many predicted this outcome. All the rugs we have covered so far have been different. This rug wasn’t a “project gone dark”, vintage rug. It was a crony rug where they tanked the price of the token by an insider liquidating the entire treasury through a smart contract password only they had access to. All while claiming innocence.

It was sort of a unique situation; smart contract challenge-key, rugged its own treasury.

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2. SquidGame Coin

Ah, this one was a rug for the ages, but we couldn’t give it the top spot, even as wild as it was. Unlike many other rugs, this one went mega-viral for being caught real-time on camera during a twitch stream. We covered this when it happened in early November.

The ERC-20 token went up 90,000% based on it leeching off the worldwide hit Squid Game series on Netflix.

Of course, it went to 0 days later. This was a white-collar rug, in that, it was a sell-off rather than outright theft (it fell 99.9%).

The fact that there were misspellings in the whitepaper and no team LinkedIn profiles should have been a dead giveaway that something was up. Though many did see this coming from a mile away, like the founder of Avalanche.

Their strategy was as simple as it comes. As we reported, there was a lock-up function in the smart contract that was designed to prevent sales. So when people bought…they couldn’t sell, period. With no sell-pressure — and the scammers holding most of the tokens in one wallet — they sold all at once, sending the token straight to 0.

Again smart contracts are the easiest way to rug people. Squid coin was a very notable rug because of its ties to the hit show, and the media propagating the incredible rise of the coin. The media certainly is a big reason Squid token scammers made off with over $3 million of retail crypto.

The “project” utilized tornado cash and got out. But guess what? The token still trades on Gate.io, nonetheless.

White-collar it is.

It was kind of a unique situation; media hype and viral grift proved to be a scammer’s gift.

1. Iron Finance

This may come as a surprise to you. Maybe you forgot. Remember Mark Cuban hyping up ‘Iron Finance’?

Yes, the Shark Tank’s top rank got rugged back in June. A famous billionaire rug-pulled after shilling some random coin? Pretty funny, to be honest. Cuban was providing 100% of the liquidity to a pair in Polygon’s Iron Finance protocol with the $TITAN coin being the centerpiece.

Cuban wrote a whole blog and tweeted about it, shilling Iron Finance and Titan saying: “I am currently the only LP in this pool, so I get 100pct of the fees.” Ironically, as a piece of advice to his followers, he said: “DYOR and make sure the platform has a legit business.” The protocol was offering 10,000% yields for staking. Sounds legit.

Iron Finance

I like to call that the “cup-less handle.”

Anyhow, the most interesting part of the whole story is Cuban saying he got hit by the rug, but yet got out before everyone else. How’s that possible? “I got hit like everyone else. The crazy part is I got out.” Very odd, especially considering that his involvement with Iron caused the rug.

IRON was a stablecoin backed by 75% USDC, 25% TITAN. When IRON was minted, demand for TITAN increased. Because of Cuban hype and no liquidity, massive whale selling of TITAN for USDC “caused panic” and the selling saw the IRON stablecoin go “off peg”. As you guessed, TITAN went to zero. $2 billion was lost. Let’s call it the panic rug.

Put simply, when the value of TITAN fell to zero rapidly, because of TITAN sell orders in the market, it caused the immediate collapse of the protocol as the IRON peg became unstable. Cuban claiming that he provided 100% of the liquidity for the DAI/TITAN pair while saying he was rugged, but also goy out leaves many questions.

It was a very unique situation; shark tank clout, whales with a hedge, a liquidity drought, and for that reason…

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