- The cryptocurrency market in 2024 is seeing a rise in Web3-related fraud cases, with rug pulls being a common tactic used by scammers.
- Investors need to carry out detailed research and implement risk management strategies to guard against these fraudulent activities.
- Noteworthy incidents include ETHTrustFund’s and ZKasino’s rug pulls, which significantly impacted investor confidence and financial security.
Crypto investors must stay vigilant in 2024, as the surge in Web3 scams like rug pulls threatens financial stability and trust within the community.
High-Profile Rug Pulls Shaking the Crypto World in 2024
As we navigate through 2024, the crypto industry is marred by a concerning rise in Web3 fraud, most notably via rug pulls. This deceptive practice, where developers suddenly withdraw liquidity from their projects, has resulted in significant financial losses for investors and severely harmed community trust. In the thrilling yet precarious atmosphere of the current bull market, the emphasis on comprehensive research and risk management is paramount to protect stakeholders from such malicious schemes.
ETHTrustFund DAO’s $2 Million Exit Scam
One of the notable scams of 2024 involved ETHTrustFund, a protocol on the Base network, which notoriously executed a $2 million rug pull. On July 20, ETHTrustFund transferred funds from its treasury to Tornado Cash and Railgun mixers and subsequently erased all online presence. Security experts confirmed it was an exit scam after lead developer Peng ceased all communications since April. This incident was brought to light by investor Octoshi and validated by PeckShield, a renowned blockchain security firm. ETHTrustFund operated as a decentralized autonomous organization (DAO) with promises of yield generation and inflation management, but ultimately left investors in disarray.
ZKasino’s Devastating $33 Million Fraud
ZKasino’s rug pull, amounting to $33 million in Ethereum, has spotlighted the vulnerabilities within the decentralized finance (DeFi) landscape. The scam came to light following the withdrawal of 10,500 ETH, effectively stranding investors. ZKasino’s abrupt cessation of communications and the banning of concerned users raised immediate red flags. Investigations by Cyvers revealed that the stolen assets were redirected to the Lido protocol, deceiving investors who believed in the platform’s legitimacy. This case serves as a grim reminder of the importance of rigorous due diligence when investing in DeFi projects.
The Swift Collapse of ORDEX Token
The ORDEX token’s sudden rug pull saw its value plummet to zero within an hour, as the development team converted one quadrillion tokens into approximately $70,600 worth of ETH. This quick exit scam underscores the perils of emerging crypto narratives, with fraudsters exploiting them to create scam tokens. Observations by PeckShield highlighted that the token imitated the names of legitimate projects, posing additional risks to investors. To mitigate such risks, traders are advised to verify ticker symbols and utilize crypto data aggregators, especially when dealing with low-cap tokens.
Lena Network’s Candy Token Fiasco
The Lena Network’s CANDY token rug pull, which led to an 87% value drop and a $2.9 million loss, is another stark example of fraud in the crypto space. Just hours after launch, 753 ETH was moved to an address linked to the OKX exchange, followed by an announcement regarding the renouncement of token ownership. The protocol had initially raised over 850 ETH, but the abrupt exit resulted in significant losses for investors. Reports indicate that over $200 million has been lost to rug pulls and hacks in 2024, a 15.4% increase from the previous year, reflecting the ongoing challenges in securing the crypto ecosystem.
Conclusion
The year 2024 has witnessed a substantial rise in Web3 fraud, particularly through rug pulls, leading to significant financial losses and a deterioration of trust within the crypto community. Incidents involving ETHTrustFund, ZKasino, ORDEX, and the Lena Network’s CANDY token highlight the urgent need for diligent research and robust risk management strategies. As the landscape continues to evolve, it is imperative for investors to remain vigilant and well-informed to effectively navigate these formidable challenges.
