Rugpulls are nasty, nasty deals on the blockchain. But there are ways to prevent them.
What is a 'rug'? It's when a new NFT collection is grown and promoted in bad-faith. Many or all of the promises were vapor. The con man gets away with the cash leaving many burnt.
After the mint successfully sells out, the fraudster(s) promptly deletes the community Discord, Twitter, Website and all associated properties, or abandons them entirely (usually with a team of mods quelling any last minute anger and questions by community; the natural complement of co-conspirators in finance crimes like this).
Consequently, the price of the NFTs minted takes a nosedive and many, many NFT buyers are hurt. Magic Eden (SOL's premier marketplace for NFTs) flags these nowadays but in weeks prior to this post, there were no protections whatsoever.
What is the the result of regular rugpulls in a marketplace like Magic Eden?
A $1-$3 million dollar pay day for a con job with a massive trail on the blockchain doesn't just go away. The injuries felt by buyers isn't forgotten. The con master mind stays elusive and far or out of reach but his attack on the blockchain community is far reaching. The accomplices take their bribes and move on to the next job, probably. It's hard to stop once you've tasted high finance crime, for these types of people.
One rugpull is damaging enough for an NFT marketplace. In 2021, Wax mainnet suffered many rugpulls - both token rugs and NFT mint rugs. But consistent rugs on the million dollar scale in Solana is building a reputation for marketplaces and SOL itself.
Magic Eden appears to be encouraging rug pulls without vetting collections. This is not a paycheck for them, but liability and lawsuits in the coming years if they continue in the same manner. Flags aren't enough. KYC is absolutely necessary at this point because 10-15$ million dollar rug days are unquestionably going to garner the FBI's attention, if it hasn't already.
So to you rugpuller conmen, your finance crimes are coming for you. The blockchain record will show where your money was offloaded on exchanges. Your addresses will be collated and investigated. And marketplaces that encourage, foster and take soft stances on finance crimes will be taken down eventually by the authorities.
You can't steal $10 million a day, as a matter of practice, and not get heat on you. On notice; Magic Eden for promoting mints of conmen. Solana: a huge reputation for finance crime, seemingly bigger than ETH now.
Please comment below with your rugpull experiences.
