Rug Pulls are not unusual in the NFT world. A lot of rug pulls have taken their course while the NFT space was developing. Well, everything has its dark side, and rug pulls are one of them in the NFT space. A number of rug pulls have occurred in the NFT space and these instances made the NFT enthusiasts more alert and wary of getting involved with NFTs.
This article comes with a list of the biggest rug pulls that have taken place in the NFT space.
What is a Rug Pull?
Before we get on with the list, let’s gather our heads around to what a rug pull is.
The instance when NFT project developers or cryptocurrency developers entice early investors to a project and then abruptly abandon it, this is known as a rug pull scheme. Either stealing the project cash or selling the pre-mined assets accomplishes this. In either scenario, the goal is to steal every penny from the community and investors that supported the project. The developers will rapidly transfer the cash out of the ecosystem and effectively disappear if a project’s NFT values climb sufficiently to appease the individuals looking to pull off a rug pull. This leaves the investors with little or, more likely, no legal remedy at all.
Now let’s get on with the NFT Rug Pulls.
Frosties freeze rug pull nets $1.3 million
The Frosties NFT project was the result of the collaborative efforts of Ethan Nguyen and Andre Llacuna. The NFT project that comprised 8,888 NFTs was launched on 7th January 2022 and each was listed for 0.04 ETH. The project had amassed a broad community in their Discord server and the creators promised the owners raffles, merch, and even a fund to show that the project was here for the long run.
It only took hours for the NFTs to sell out and the sale brought in 335 ETH. The proceeds of the sale were then transferred to multiple wallets, and the project’s website and Discord server quickly vanished. People who had invested in the community were unable to contact the creators, leaving them with nothing more than their digital artwork and a lot of unfavorable emotions.
Although Nguyen and Llacuna were caught. As this was just as the Department of Justice started paying more attention to instances of fraud in the cryptocurrency industry. Prosecutors from the Southern District of New York arrested and charged the pair on March 24, 2022, following a two-month investigation. They were accused of conspiring to commit fraud and money laundering on the grounds that they had “promised investors the benefits of the Frosties NFTs, but when it sold out…pulled the rug out from under the victims, almost immediately shutting down the website and transferring the money.”
Despite the fact that the case is still pending, it is largely acknowledged as the department’s first rug pull bust and a critical turning point in NFT history.
Big Daddy Ape Club
The Bug Daddy Ape Club is a collection of 2,222 ape-themed NFTs which never reached the hands of its investors. The developers of the NFT promised them that it will be minted on the Solana blockchain and then will go to the Solanart marketplace.
Big Daddy Ape Club stands up as the most excruciating rug pull in the Solana blockchain’s history. In the majority of rug pulls, project creators present some NFT art and then flee with the money. Contrarily, Big Daddy Ape Club managed to collect 9,136 SOL, or about $1.3 million at the time, to mint its NFTs. But those NFTs weren’t even real.
The project’s Discord was shut down by Big Daddy Ape Club in the days leading up to the mint. Shortly after, the project’s website and Twitter account vanished. The NFTs that investors paid for never materialised. This rug pull was particularly annoying because Civic, a decentralized identity verification business, had approved the project’s verification. Although, Civic’s CEO Chris Hart, and the rest of the company are currently collaborating with law authorities to identify and detain individuals behind the scam.
Baller Ape Club Rug Pull gets noticed by the Department of Justice
The Baller Ape Club is another rug pull in the NFT space and it is by far the biggest rug pull. Le Anh Tuan, the person behind the Baller Ape Club launched the collection, deleted the project’s website, and laundered the $2.6 million he had stolen from Baller Ape Club investors.
Although shortly he was caught by the Department of Justice. The Department of Justice recently accused Tuan of conspiring to commit wire fraud as well as international money laundering. The Department of Justice claims that Tuan changed the money into several cryptocurrencies before “chain-hopping,” or moving it from one blockchain to another. The case stands out as “the largest known NFT conspiracy to date,” according to the Department of Justice.
The Evolved Apes NFT community is scammed by Evil Ape
Just one week after the collection’s release, Evil Ape, the founder of Evolved Apes, took off with 798 ETH ($2.7 million) collected from the investors. The project website and Evil Ape’s Twitter account are no longer active as well. Evolved Apes are 10,000 NFTs. They are collectively referred to as “locked inside a lawless land” in the satirical description. It was intended for the project to be a fighting game similar to Axie Infinity. It goes without saying that the game never happened. However, the collection is still available on OpenSea, where floor prices have fallen to an expected 0.01 ETH.
Pixelmon’s almost Rug Pull
The Pixelmon NFT project cannot be termed as a true rug pull. But the project is a perfect description in the NFT space of how having high expectations for a project can be demolished in mere seconds. The Pixekmon NFT project consists of 10,005 pixellated characters NFTs. This was launched on 7th February 2022 and up to its release since its announcement it had amassed such a huge community with a lot of expectations. With its promises of an excellent project, artwork, and a bright future, it made its community hyped for it.
An AAA open-world adventure game with low-res pixel visuals evoking Minecraft and a world resembling Pokemon was promised by Pixelmon. Its founder, Martin van Blerk, said that the team behind the project had all previously worked for companies like Disney and Activision, which raised expectations that the NFT art if released after launch, would truly be something exceptional. The Pixelmon team’s announcement that the mint will be modeled after a Dutch auction with a steep beginning price of 3 ETH served to support this idea.
Within an hour of the mint’s inauguration, the 8,079 NFTs that were made available for the primary sale were all gone, with the majority of collectors paying the full 3 ETH asking price. By the time it was over, the Pixelmon crew had earned 23,055 ETH, or slightly over $70 million.
Although when the art was revealed on 16th February the investors of the project were left speechless, and that’s in disappointment. What the reveal showed the collectors were far below what they had expected the art to be. The resultant pixel art that was revealed was something to be expected from amateur artists. This is not to argue that pixelated art cannot be beneficial to an NFT community, but members of the community felt their world had been turned upside down. Many of the NFTs experienced rendering problems; they would sometimes display upside down or not at all. The majority have monotonous designs with little to no differences.
The fear of being rug pulled was further fueled by accusations to Blerk of using cash from the project to buy a variety of blue-chip NFT products, including Bored Apes, Azuki’s, CloneX, Invisible Friends, and others. However, Pixelmon has resolved the issues. The developers acknowledge that the launch was a failure, and van Blerk apologized on Twitter. Recently, the project seems to be recovering. Its floor price is currently.21 ETH and some of its comically terrible NFTs have gained a cult following and are selling for two, four, and occasionally even five ETH at a time. This is about the best result you can hope for in a circumstance similar to a rug pull. In any event, the Pixelmon story serves as a useful cautionary tale.
From the above list, we can say that rug pulls are not unusual in the NFT space. There are scammers who manage to get away with millions of dollars of investors. They create hype around their project through fake announcements and rising expectations of what is a null set. Therefore, the enthusiast should be careful before getting onto an NFT project. There are also not many laws that protect the investors very much as NFTs are recent developments.