Unveiling the Rugpull Scam Process: Deception in the Crypto & Web3 Universe
In this article, we’re going to detail a scam called Rugpull that has several different types of methods. Today we are going to delve into the details of this.
Type of Rugpull
Regarding rugpull, we can classify two main levels of severity: Hard rugpull, Soft rugpull.
- Hard Rugpull The risk of such levels is severe. And it often happens quickly without the investors or participants in the project being aware of it. In most cases, it is Liquidity removal, sudden Dump Tokens, pulling money out of smart contracts, and taking advantage of vulnerabilities to drain money by developers.
- Soft Rugpull Less severe risks This happens slowly and continuously, resulting in small increments of the price. But the final destination is an exit scam or abandonment of the project. Most often it disappears slowly. which may pretend that the project is still in progress but did not develop any further The amount taken out might not be that high depending on when he was slowly selling coins. How much will the severity affect the price?
Liquidity Removal is when such projects remove liquidity on the dex, resulting in significantly less liquidity and severely affecting prices. Removed liquidity may be transferred to the developer's wallet and misused.
Dump Tokens It is selling tokens of a large number of projects at once. severely affected the price. and when the developer/owner of the project already got money immediately shut down the platform including their own social accounts
Pulling money out from the smart contract is by relying on the malicious functions that were originally built into the smart contract. The potential of function can extract funds from users/investors/participants in the project. It may be removed altogether without any communication with the project community, which is extremely serious. Normally such a function is if there is an audit (smart contract audit) from a standardized company. will appear in the section Centralization Risk Except for other companies that are not quality, it will not appear. or to appear in other sections which does not meet the standard — — know the risks More centralization risks can be found here.
Vulnerabilities to drain money by developers is that developers create functions that have some errors. Most fraud projects like this often don’t have a smart contract audit, or use bad company services, such as running a single tool and saying that “No abnormality found”. Companies that are not quality are found everywhere in the market. They will remain anonymous. Reports are unprofessional. As a result, functions that don’t work properly become the benefit of the developer or the person who wants to benefit from them.
Exit scam is to stop continuing the project which may notify the community or not notify the community which the money should be used to develop the project Instead, it was used for personal matters or things that were not related to the development of the project. They may pull that investment bit by bit. We call it a soft rugpull.
Abandonment is to abandon the project With the disappearance of the developer without any notice to the community. which is often found They may have taken the money during the development of the project.
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