Non-fungible tokens (NFTs) have become a hot commodity in recent years, with some people making millions of dollars by investing in them. However, the NFT market is also rife with scams, and investors need to be aware of the risks involved.
A rug pull is a type of scam in which the developers of an NFT project abandon it and take the money that investors have put into it. This can happen for a number of reasons, such as the developers running out of money or simply deciding to take the money and run.
Beware of the Animoon Rug Pull Scam
A new NFT project called Animoon has managed to make off with roughly $6.3 million after duping investors with poorly modified Pokemon art and promises of a videogame where players could use their NFTs as in-game characters.
The project claimed to have a signed Non-Disclosure Agreement (NDA) concerning a partnership or agreement with the company behind Pokemon. However, there is no evidence to support this claim. In fact, the Pokemon Company has denied any affiliation with Animoon.
Developers also mentioned that they were in talks with Bandai Namco to obtain licenses for Digimon intellectual property. However, there is no evidence to support this claim either. Bandai Namco has denied any affiliation with Animoon.
Apart from the sloppy artwork featured in the 9,999 NFT collection, which consisted mostly of re-colored Pokemons, the project had many other red flags. These included the promise of a lifetime dividend of $2,500 for holders of the 15 legendary NFTs and mentions of a partnership with TopDeck that did not exist.
In a bid to attract more unwary investors, the project even went as far as to offer physical gifts like brand streetwear to pre-sale investors. Famous Youtuber, Jake Paul, promoted the project on Twitter. The post has since then been removed. Jake Paul has been involved with multiple NFT scam projects, which could be considered another red flag in and of itself.
Evolved Apes Rug Pull Scam: $2.7 Million Stolen from Investors
A new NFT project called Evolved Apes managed to steal $2.7 million (798 Ether) from investors in the week following the collection’s launch. The project capitalized on the hype generated by the well-known Bored Apes Yacht Club collection, promising investors that their NFTs would be playable characters in a fighting game that was never developed.
The project’s website and founder’s social media accounts have since been removed from the internet, although the collection still exists in the OpenSea marketplace. The anonymous founder of the project, who ironically went by the alias of “Evil Monkey,” was able to trick the community and even the artist who worked on the entire collection, deleting his social media accounts and vanishing with investor’s funds.
This is just the latest in a string of NFT rug pull scams. In recent months, there have been several high-profile cases of developers abandoning their projects and taking off with investor funds. This is a reminder that the NFT market is a Wild West, and investors need to be very careful when investing in any project.
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The Department of Justice (DOJ) has charged Le Anh Tuan, the founder of the Baller Apes Club NFT project, with conspiracy to commit wire fraud and conspiracy to commit international money laundering. Tuan is accused of stealing $2.6 million from investors in the Baller Apes Club rug pull scam.
The Baller Apes Club was an NFT project that launched in April 2022. The project promised investors that they would receive unique NFTs that could be used in a future video game. However, after the project launched, Tuan deleted the project’s website and social media accounts, and he disappeared with the investor funds.
The DOJ alleges that Tuan converted the stolen funds into multiple cryptocurrencies in an attempt to launder the money. However, the DOJ was able to track Tuan down and charge him with wire fraud and money laundering.
This is the first time that the DOJ has charged someone with a crime related to an NFT rug pull scam. The DOJ’s decision to charge Tuan sends a message to other NFT scammers that they will be held accountable for their crimes.
Frosties Rug Pull Scam: Founders Arrested, Charged with Fraud and Money Laundering
The Department of Justice (DOJ) has arrested and charged Ethan Nguyen and Andre Llacuna, the founders of the Frosties NFT project, with conspiracy to commit fraud and conspiracy to commit money laundering. The Frosties rug pull scam was the first time that law enforcement has successfully gone after an NFT rug pull.
The Frosties NFT project was launched in January 2022. The project promised investors that they would receive unique NFTs that could be used in a future video game. However, after the project launched, Nguyen and Llacuna deleted the project’s website and social media accounts, and they disappeared with the investor funds.
The DOJ alleges that Nguyen and Llacuna raised over $1.3 million from investors in the Frosties rug pull scam. The DOJ also alleges that Nguyen and Llacuna transferred the stolen funds to various wallets and attempted to launder the money.
The DOJ’s decision to charge Nguyen and Llacuna sends a message to other NFT scammers that they will be held accountable for their crimes. The Frosties case is a significant victory for law enforcement in the fight against NFT scams.
Blockverse: The Minecraft NFT Scam That Cost Investors $1.2 Million
Blockverse was a Minecraft-based NFT project that promised investors access to a play-to-earn PvP-style modified version of the game. The project sold out in under 8 minutes, raising $1.2 million from investors.
However, shortly after the sale, the Blockverse team deleted the project’s website, the game server, and the Discord server. The team also disappeared with the investor funds.
The Blockverse team claimed that they were victims of threats and doxing attempts, but this has not been verified. The team has also not provided any evidence that they were working on a Minecraft server or a play-to-earn game.
The Blockverse scam is a reminder that investors should be very careful when investing in NFT projects. There are many scams out there, and it is important to do your research before investing in any project.
These are just a few of the many NFT rug pull scams that have occurred in recent years. Investors need to be very careful when investing in NFTs, and they should do their research to make sure that the projects they are investing in are legitimate.
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Here are some tips for avoiding NFT rug pulls:
- Do your research: Before investing in any NFT project, do your research to make sure that the project is legitimate. This includes checking the project’s website, social media accounts, and whitepaper.
- Be wary of new projects: New NFT projects are more likely to be rug pulls than established projects.
- Don’t invest more than you can afford to lose: NFTs are a risky investment, and you should only invest money that you can afford to lose.
- Be patient: Don’t expect to get rich quick from NFTs. It takes time to build a successful NFT collection.
By following these tips, you can help to protect yourself from NFT rug pulls.
Stay safe and be vigilant!
This information is published by the NFT News media team.
