Crypto Rug Pull events show a new trend: the number is declining but the scale is increasing

In 2024, compared to last year, the number of rug pull incidents in the crypto assets sector has significantly decreased, with a reduction of 66%. However, the latest analysis indicates that despite the decline in the frequency of incidents, the scale of losses caused by each incident is continually expanding.

A research report published by a blockchain analysis firm on April 16 indicates that rug pull incidents are showing a year-on-year decline trend, with 21 independent incidents recorded at the beginning of 2024, while only 7 have occurred so far this year.

However, the data also reveals that the Web3 ecosystem has lost nearly $6 billion due to various fraudulent activities since the beginning of this year. The report specifically points out that 92% of this staggering figure can be attributed to the collapse of the OM token value, although the project’s founder strongly denies that this was a well-planned scam.

In contrast, the total loss caused by rug pulls in the same period of 2024 is approximately $90 million.

Industry analysts say: “This change indicates that while the frequency of rug pull events is decreasing, the destructiveness of each event is becoming more severe. These scams are becoming increasingly complex, often operated by teams with sophisticated brand images and carefully woven narratives.”

!7363928

Memecoin has become a primary target for rug pull events

Experts point out that the nature of rug pulls is evolving. In the first quarter of 2024, most fraud incidents are originating from DeFi protocols, NFT projects, and meme coins. In the same period this year, meme coins have become the primary target of rug pulls.

The Libra token project on the Solana network (LIBRA) has recently become a prominent case of a rug pull. On February 14, after Argentine President Javier Milei posted related news on social media, the project’s market value soared to $4.56 billion. However, after the news was deleted, the token price plummeted over 94%, raising questions in the market about price manipulation.

Industry experts warn: “Fraud and exit scams remain a persistent threat, especially in ecosystems where projects can quickly gain attention through hype but may abscond with user funds overnight. Despite increasing investor awareness and increasingly sophisticated tools for detecting suspicious behavior, rug pulls remain a recurring issue, particularly in the fields of DeFi and newly issued tokens.”

How to Identify Potential Rug Pull Risks

Analysts point out that a sudden surge in the number of active wallets without a clear reason, or unusually high trading volume with low user activity, are potential rug pull warning signs.

Other warning signs include: unverified smart contracts, limited GitHub activity records, anonymous development teams, and projects with a sudden surge in user numbers overnight.

"As the industry continues to mature, so do the methods used by criminals. “While rug pull behavior may never be completely eliminated, the negative impact can be significantly reduced when users have the right information and tools.” "