Pulling the rug from under someone has been a well-known expression in society over many years and is the metaphoric term for the removal of all normal assistance leaving the person in question to fall on the hard floor exposed by the rug not being there for their soft landing.
In the digital age of cryptocurrency, that expression has been re-invented and reworded to a “rug pull”.
This has been done over time in the many cyber chatrooms and crypto betting sites discussing the nefariousness that goes on in the digital monetary system.
Last week we touched on the subject a little, but now, we take a detailed look into the rug pulls.
A rug pull in the crypto landscape is when a crypto developer hypes up a project usually on social media, which in turn prompts investors who are looking for an easy yield.
Once they have attracted the investors, the rug puller disappears with the profits using the investors’ assets in what is also called a Ponzi scheme.
Coming in at #1 is the Thodex scandal of 2017.
The CEO of the firm itself cleared off with customer funds. The excuse used by the founder, Faruk Fatih Özer, was that they had ceased trading because of cyber-attacks but customer funds were safe before promptly going on the run!
Eventually, Ozer was caught in neighboring Albania in 2022, and in a timely fashion was charged and found guilty of all charges. Due to the Turkish criminal law enforcement, the criminal’s sentence is set to reflect the 2000+ investors he ripped off. He is currently serving 40,564 years of imprisonment. Yes, you read it right.
The next cab off the rank and coming in at #2 is the One Coin scandal of 2017.
Again in Europe, the founder of One Coin, Ruja Ignatova, a forty-three-year-old German-born Bulgarian national disappeared off into the sunset with up to $4 billion when pitching the company as legitimate.
Amazingly, Ignatova is only the eleventh female to find their way onto the FBI’s Top 10 Most Wanted List.
Upon Ignatova disappearing, her brother took over but was arrested in 2019 and pleaded guilty to money fraud.
His sister Ruja is still in the shadows of society and reappeared when her £12.5million London penthouse was listed for sale. United Kingdom transparency rules meant Ms. Ignatova was to be found listed as the owner.
Possibly the boldest and brashest rug pull of them all happened in the middle of 2021 when Defi100 Coin posted on their website a message saying,
“We scammed you guys, and you can’t do shit about it”
Over $30 million was embezzled from close to 200,00 customers.
The Defi100 Coin rug pull was a clean kill and shows how easily fraudsters could get away with their nefarious activity of the past.
The whole Defi100 debacle is still shrouded in mystery.
When Luna crypto disappeared from the markets so did approximately $60 billion of the investors’ monies, who had proclaimed themselves “lunatics”.
There was a warrant out for the arrest of Do Kwon in South Korea while Interpol had a red notice that caught him boarding a plane in Dubai. Kwon was the co-founder of Terraform Labs, where the sister tokens Terra and Luna were held, and he is currently incarcerated in Montenegro awaiting deportation to either South Korea or the United States to face trial.
The Anubis DAO debacle cost the industry $60 million when an initial massive bonding from an OHM fork (the process of implementing upgrades to the OlympusDAO database) allowed a developer to drain away the funds.
All hope was lost for investors eight months later when the trail of stolen funds went cold after the fraudsters liquidated the stolen assets through Tornado Cash.
To enable the bonding, the fraudsters brought in the guise of a dog coin giving investors the impression they were getting involved in the next hugely popular Doge Coin.