February 17, 2023

The Biggest NFT Rug Pulls in History: How to Identify Crypto Scams

The world of non-fungible tokens (NFTs) has been rocked by a series of “rug pulls” — a term used to describe sudden and unexpected collapses of NFT projects that result in a loss of investments for their contributors. Despite the growing popularity of NFTs and their potential to revolutionize the art and collectibles industries, these rug pulls have cast a shadow over the credibility of the NFT market and raised questions about the security of NFT investments.

In this new Hackernoon story, our founder and CEO, Sergei Khitrov, shares his thoughts on fraud in the NFT sphere. How it works and how to protect yourself from scams in NFT projects.

Sometimes it happens that an investor invests money in a promising and attractive project at first glance. In order to check the safety of the project one needs to spend a lot of time, therefore some people invest at their own risk. At the beginning the assets seem to grow in price at an enormous rate. But at some point, their cost drops to zero, and the developers disappear and do not get in touch.

This phenomenon is called rug pull, or “carpet pulling”. In such schemes, the project team abandons the project and disappears with all the investors’ money before the fraud is revealed. Previously, this was common mainly in the cryptocurrency market, but cases of fraud have become more frequent in the NFT sphere. In the article we will tell you how to identify rug pull and not to fall into the hands of scammers.