Unveiling the Rug Pull Eyewash in the Crypto Assets Industry

Rug Pull is one of the most common eyewash tactics in the Crypto Assets field. Although many cases have been exposed, there are still a large number of potential scams that have yet to be discovered. According to data statistics, there are at least 188,000 suspected Rug Pull projects on mainstream blockchain networks.

Distribution of Rug Pull Projects

Data shows that approximately 12% of BEP-20 tokens on the BNB Chain exhibit fraud characteristics. In the Ethereum network, about 8% of ERC-20 tokens show signs of fraud. Additionally, approximately $910 million in ETH related to fraud was processed through regulated Crypto Assets exchanges. Other data indicates that this October set a monthly record for losses in Crypto Assets, with 11 DeFi protocols being attacked, affecting assets totaling up to $718 million.

Some large crypto asset trading platforms have become prime targets for scammers and hackers due to their large user base and ever-expanding features. To address this issue, some platforms have begun to integrate risk monitoring tools to detect and alert users to potential risk items in real-time.

Common Tactics of Rug Pull Projects

Rug Pull projects typically involve carefully designed code in smart contracts to siphon funds from investors. The design goals of this code often include:

1. No secondary sales
2. Allow project developers to mint new coins at will
3. Charge high sales fees to buyers

These malicious scripts are hidden in the token contracts, and once investors purchase them, they face huge risks. In most cases, Rug Pull tokens appear to be no different from other normal Crypto Assets and follow the homogenous token standards of blockchain, but the problem is hidden in the source code of the smart contract.

Fraudsters often launch Rug Pull projects after deploying tokens with vulnerabilities. They create liquidity pools on the decentralized exchange (DEX), establishing trading pairs between these tokens and other legitimate Crypto Assets. Subsequently, they artificially generate a large volume of trades to inflate the token's value, attracting retail investors.

In addition, Rug Pull projects may also disguise their legitimacy in the following ways:

1. Create eyewash websites and project roadmaps
2. Claiming false partnerships
3. Advertise on social media

Once enough investors purchase the tokens, the fraudsters will quickly sell off, exchanging the tokens for other Crypto Assets, such as ETH or USDT. This large-scale sell-off will cause the token price to plummet to zero, completing the Rug Pull eyewash.

Common Types of Rug Pull Coin Eyewash

Currently, there are three main types of Rug Pull in the market:

1. Hidden Honeypot Vulnerability
2. Hide Custom Token Function
3. Set balance modification backdoor

Honey pot vulnerabilities typically prevent token buyers from reselling, allowing only developers to sell the held tokens. Data shows that as of October 25, 2022, there are approximately 96,008 token projects in the market with honey pot vulnerabilities.

The private token creation feature allows specific accounts to mint new tokens using hidden functions within the contract. As of October 25, 2022, there are approximately 40,569 token projects with such features.

The balance modification backdoor allows specific accounts to modify the balance of token holders, which may prevent investors from selling or withdrawing funds.

Conclusion

As the number of eyewash in Crypto Assets increases, investors need to be particularly cautious when selecting crypto projects, assessing potential fraud risks. At the same time, regulatory agencies should also strengthen their efforts to protect consumer interests and enhance the integrity and transparency of the market. Only in this way can a safer and more reliable Crypto Assets ecosystem be established.