The cryptocurrency industry has grown in value in the last five years but so has the number of people with malicious intent to defraud unsuspecting investors of their money. The rising number of scams perpetrated in crypto using the rug pulling trick has caused investors to be skeptical of projects that they are unsure of its founders and tokenomics.
The latest victims of crypto rug pull scams are the investors of SnowDog DAO (SDOG), a memecoin that was said to be the rival of fellow dog coin, Shiba Inu. SDOG token was rug pulled and its value dropped instantly by 90%. The scam took place on one of the biggest decentralized cryptocurrency exchanges, Avalanche.
The thieves behind the scam took $10 million from the investors’ funds and put them at a loss. SDOG watchers and investors earlier took to Twitter to express their disappointment at what many called the “ruining” of a project that looked good. Several of them lamented their losses and called for stronger security measures to prevent theft.
The leader of the project, Twitter user @SnowdogDAO, entered a deal to migrate all of a TradeJoe DEX and buyout his DEX Snowswap for a fee believed to be $40 million. But someone hijacked the deal using a special transaction key. The unknown thief then swapped the SDOG tokens for other crypto tokens.
Although most other rug pulls have never offered an explanation, Snowbank, the promoters of SDOG, made a statement earlier in the day. Snowbank said that the entire project and token was planned as a one-week project to test a game theory. They said that it was only due to bad communication that most of the inventors were unable to sell their tokens. In the end, only 7% of the investors were able to sell their tokens.
Crypto Scams are Rising
The situation was explained on Twitter by a user with the account $artoriamaster. According to several tweets about it, SDOG enthusiasts suspect that it was a coordinated act to rug pull the project and make the front man seem innocent. The theft has now left hundreds of investors at a loss.
Others have also cited the role of promoters who seemed to be “aggressively” marketing SDOG as the next memecoin that will rival Shiba Inu. The relentless barrage of adverts brought in a lot of investors that eventually lost their money to the scam.
SDOG’s unfortunate situation is the latest in a long and growing line of scams that have been carried out through the creation of tokens and listing them on exchanges to get investors. In August, investors in a solana-based Defi protocol, Luna Yield, lost $6.7 million. In October , investors in a Binance Smart Chain project, Turtledex Rug, lost about $2.5 million to a rug pull.
The potential exposure to being scammed is one of the reasons why governments are heavy on crypto regulation. If cryptos are to be accepted as the new financial system, more must be done to prevent these rug pulls from being pulled off.