Top Rug Pulls in 2024: Rising Web3 Fraud and Investor Risks

Crypto Scams Alert: High-Profile Rug Pulls Cases in 2024

As 2024 brings excitement and innovation to the crypto world, a troubling trend has emerged: Web3 fraud. The most prevalent form is the rug pull, where project developers abruptly withdraw liquidity, leaving investors with significant losses and damaging community trust. These scams have become all too common in the blockchain ecosystem. Amid this thrilling bull market, it's essential to emphasize the importance of thorough research and risk management to protect against such deceptive practices.

ETHTrustFund DAO $2 Million Rug Pull

ETHTrustFund (ETF), a Base network protocol, executed a rug pull on July 20 by transferring $2 million from its treasury to Tornado Cash and Railgun mixer apps, then deleting its websites and social media accounts. This led security experts to conclude it was an exit scam. 

The incident was first reported by crypto investor Octoshi on July 21, and later confirmed by blockchain security firm PeckShield. ETHTrustFund, which was designed as a decentralized autonomous organization (DAO) with rebasing features, had promised to generate yield for token-holders and manage inflation through a unique debasing mechanism. However, the lead developer, Peng, stopped responding to messages in April, and the project was ultimately abandoned.

ZKasino $33 Million rugpull

The $33 million Ethereum (ETH) rug pull by ZKasino has alarmed the cryptocurrency community, highlighting the risks in the decentralized finance (DeFi) sector. The scam was detected after a massive withdrawal of 10,500 ETH, which left investors unable to access their funds. 

ZKasino ceased all communications and banned concerned users, further raising suspicions. Analysis by Cyvers revealed that the funds were diverted to the Lido protocol for staking, betraying investors who believed their money was being used for a legitimate betting platform. This incident underscores the need for vigilance and due diligence in crypto investments.

The ORDEX Token Witnessed a Swift Rug pull

The ORDEX token experienced a swift rug pull, dropping to zero in under an hour as the team swapped one quadrillion tokens for 30.96 ETH, worth about $70,600. This incident highlights the risks associated with new crypto narratives, as fraudsters create scam tokens to deceive investors. 

PeckShield noted that the scam token shared the same name as legitimate ones, similar to previous incidents with fake tokens like GEMINI and ISLAMIC. Traders are advised to verify ticker symbols and use crypto data aggregator tools to avoid such scams, especially with tokens that have low market capitalization and high volatility.

Lena Network’s Candy (CANDY)

Lena Network's Candy (CANDY) token experienced an 87% drop after a $2.9 million rug pull, just hours after its launch. The rug pull involved transferring 753 ETH to an address linked to OKX exchange. This incident occurred shortly before Lena Network announced it had renounced ownership of the token contract. 

The protocol had raised over 850 ETH ($3.2 million) in its initial farm offering. Rug pulls and hacks remain a significant concern in the crypto space, with over $200 million lost in 2024 so far, marking a 15.4% increase from the same period in 2023. In 2023, $1.8 billion was lost to such incidents, with 17% attributed to the North Korean Lazarus Group.

Conclusion

In 2024, the crypto market has seen a surge in Web3 fraud, particularly rug pulls, which have caused significant financial losses and eroded trust within the community. High-profile incidents like those involving ETHTrustFund, ZKasino, ORDEX, and Lena Network's Candy token underscore the critical need for vigilance, thorough research, and risk management to protect against such deceptive practices. As the market continues to evolve, investors must remain cautious and informed to navigate these challenges effectively.

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