NFT Rug Pulls — Be Aware of the Signs!
What is a Rug Pull?
As of July 2021, reports say that around $113 million USD has been scammed from rug pulls alone.So what exactly is a rug pull? A rug pull is when a project markets themselves as the next big thing and attracts investors to support it. Once enough money is earned, the creators and developers completely abandon the entire project and disappear with the money. Rug pulls can come in many different forms, but the most popular cases are cryptocurrencies and NFT scams.
Our tools, Price Estimation, Forgery Detection, Washtrade Detection, each have their own uses to help you lower your chances of being scammed when buying NFTs, and can even be used together so that you can surround yourself with a bullet-proof ecosystem. This ultimately makes the NFT market more transparent and safe, and gives enthusiasts all the data they need to make an informed decision.
Why are there so many scammers?
Many individuals take advantage of people looking for quick profits and scam them of their money, and the crypto industry is no exception. With the explosion of crypto and NFT news, it’s no secret that people are trying to get a piece of the action and earn fast money before doing their due-diligence.
NFT Rug Pulls
Over the past few months, NFT rug pulls have been a popular way of scamming people out of their money, as many scammers have seen immense success doing this. Some of the most recent and most talked about NFT rug pulls are Evolved Apes and Baller Ape Club.
Riding on the coattails of the popular NFT collection Bored Ape Yacht Club, these two ape-themed NFTs made off with a total of roughly $4.7 million worth of ETH and SOL, with Evolved Apes disappearing with $2.7 million of that.
It is important to note that both Evolved Apes and Baller Ape Club started off like any normal project — with a team, community, and investors. Although people who fell victim to these scams admit they noticed red flags throughout the project, they claimed they were blinded by the potential they saw and ignored them.
Evolved Apes creator “Evil Ape” not only duped the community supporting him, but even the artist behind the entire collection. Evil Ape erased his tracks after the official public mint by deleting all the Evolved Apes social media platforms, and leaving behind the unerasable blockchain history of the 798 ETH transferred to him.
On the other hand, victims of the Baller Ape Club collection did not even receive a NFT. Instead, the creators of Baller Ape Club gave the thousands of anxious buyers a fake link that told them their transaction failed after they tried to mint their NFTs. However, their transactions went through every time, and users were unknowingly sending their SOL to the creators for nothing. The creators quickly pulled the plug and deleted all their tracks, just like Evil Ape did.
How to avoid being scammed?
Although there is no definite way to not get scammed, there are ways to take precautions that help lower your chances. The underlying message for all these tips is to *do your own research* (DYOR)
- Research the team: Although not all NFT collections have a doxxed (publicly identified) team, many of the most popular ones do. Many big NFT collections are made by trusted people in the crypto community, or in their own respective communities, such as a popular artist diving into the world of NFTs or artists that have previously worked on other NFTs.
- Research the community: Are there any well known people, or a community of crypto enthusiasts? These people are usually more experienced and know what to look out for, so they may have a better idea of what is going on. Don’t fall for big numbers, make sure the engagement is from real people who know their stuff!
- Only mint on official websites: Don’t go on any link provided by the creators unless it is a website like OpenSea or Mintable. Although these are not the only two safe websites to mint NFTs on, make sure to research the website before you buy!
- Look at the roadmap: Make sure the roadmap is realistic. Many rug pull schemes include an exciting roadmap to get the community fired up, but aside from the fact that they won’t actually happen, they are often too difficult to execute.
- Look out for red flags: Some of them include:
– Inconsistencies in details, e.g. The amount available to mint does not line up with previous advertised total mint number, constant price and release date change, etc.
– An unprofessional/Unresponsive team
– Confusing or nonsense responses to community questions - They ask for your personal details: Do not give out any personal information that can lead to your account being hacked! Just like a bank or any other trustworthy institution, legitimate NFT projects will not ask for your personal details such as your seed phrase!
How do I profit then?
Look, we get that you want to buy the next Cyberpunk or Bored Ape Yacht Club, but the chances of that are incredibly low. It is important to know that just because a NFT collection does not have a reputable team or high engagement, they can still be promising! There are no ways to confirm whether or not a collection is a scam, so the only thing that you can trust is your own judgement. Don’t be consumed by the thoughts of profit and think about things from an outside perspective. Remember to follow these simple rules the next time you consider investing in a NFT so you lower your risk of being scammed!
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Forgery Detection, An AI model that flags forgeries, copycats and bootleg digital art contents thereby protecting the artists and their creations.
