Things won't be the same again after these rug pulls.
We're not here to lie to you and show just one side of the picture. Not everything is black and white in the NFT space. The past couple of years have been filled with a series of negative news: skeptics, fraudulent projects, and disappearing anon developers who keep their investors in the dark. So, if the crypto space is the Wild West, non-fungible tokens are its most dangerous town.
The NFT industry has lost the trust of a large part of the community. But that same community is trying to stay strong and fight back. We're not giving up easily! We want to help people understand NFTs and support transparent and honest projects.
Just like everything else in life, you have to be careful and look at both sides before you cross the street. We'll help you navigate the space with some extra tips to avoid scammers. Let's take the example of these rug pulls, and see what went wrong, so hopefully, no one has to experience that again.
NFT catastrophes and how they’re affecting the industry
What type of art would you expect after a $70M mint? $70 MILLION!
Clearly, we're not leaving much to the imagination since this project is on THIS list.
After their artwork reveals, Pixelmon was a complete disappointment for those who invested. There was a massive hype around the project; however, people didn't receive art that reflected $70 million worth. Although the founder and dev team didn't pull the rug, as it commonly happens in these cases, the NFT gaming project was still crushed all over social media.
"But what was the problem?" You might be asking. See it yourself:
The project's idea was to become the NFT Pokemon (not officially affiliated with the franchise), but the total opposite happened. First, videos featured what seemed to be actual gameplay footage and a bit of how the rest of the art would look like. But after reveal, their NFTs became memes. Making the Pixelmon reveal the worst to ever happen in the NFT space!
After the backlash, Syber, the founder, said in their defense that the results were indeed unacceptable, but the team would use the money to work on the project and improve the collection. Hmm not enough Syber. Still not fair enough.
Lesson: Not everything that glitters is gold. Not every NFT promo video is legit!
2. Big Daddy Ape Club
2,222 ape-themed tokens were never created. That's how this story goes. Big Daddy Ape Club swiped around $1.3M at the time (9,136 SOL). The creators vanished when the art was supposed to be minted in January. And as expected, all their accounts shut down.
Solanart NFT marketplace acknowledged the rug pull, and even the US authorities were involved in tracking down the scammers' identities.
If it walks like a duck and talks like a duck, it’s a duck. If the NFT is gone, and the money is gone, that's a rug pull.
Blockverse, the on-chain NFT PvP game, sold out in 8 minutes with 500 ETH total (more than one million). A couple of days later, everything shuts down: Discord server, social accounts, and no word from the creators. What do you think? Oh, they're probably taking a break in the Bahamas? Of course not! You would've panicked as well! That's because it all adds up to a classic rug pull.
But, hold on, there's a plot twist: The team tweets again! They resurfaced and explained what had happened. Allegedly, they panicked after receiving too many negative reactions regarding high gas fees. So, they were trying to protect their team members and shut down everything. However, the creators said they would continue working on the project, because it was not a scam as people have thought. But actions speak louder than words, right?
Blockverse was actually a dead end. There were no actions taken after that message. The anonymous team just took the money and left no track behind.
Iconics was a Solana-based project of 8,000 3D artwork. This project disappeared with the money overnight, after a pre-sale of 2,000 items. What holders got instead? Random emojis. The fraudster went away with around $140,000.
Investors lost $1.3m—Just like that. Will they get their money back? Still no answers to that question.
Frostries, a collection of 8,888 cartoon ice cream NFTs in the Ethereum blockchain, sold out and seemed promising. Suddenly, users noticed everything was off. The website was deactivated as well as their social media accounts. Scammers went away with $1.3 million. Now, the community is still trying to recover from that downfall and created Wrapped Frosties as an attempt to save the collection.
Will rug pulls be the downfall of NFTs?
Our answer is no. Definitely no. We acknowledge that fraud affects the community and the industry. The saddest part is that scammers take away money from people who are making a bet in the space—choosing to support and invest in art, brands, and crypto. But scammers, these selfish people, will not downplay a whole movement that will continue to thrive. There's so much more to work with and many challenges to overcome. Fraud is just one of them.
Some of the NFT platforms are still dealing with the aftermath of the bad press they received and working on their security protocols. They're still catching up with technology and regulations to avoid these frauds from happening again.
We're building the future of the internet
NFTs can be amazing, but they certainly have their downsides. We wish these were all fake stories in this article, but it's 100% real. Scammers are being exposed as the NFT market becomes more established with time, but this will probably not be the last scandal of its kind.
As the popularity of NFTs grows, it's essential to be aware of scam artists lurking around the dark corners of the virtual spaces. But don’t let others overshadow this industry. There are still many excellent NFT projects to invest in out there if you do your research and just find the right ones!