NFT Rug Pull Season is Upon Us

Reading Time: 2 minutes
NFT rug pulls will become more and more common as the bear market progresses
Projects that mismanaged their funds will fold, while others will starve for lack of income
NFT holders will realise that a good portion of the NFTs in their wallets won’t recover

The NFT circus has come to a close, and it’s time for the serious projects to knuckle down, build, and wait for the sector to rise again, which it undoubtedly will. However, this is also the time for those less scrupulous projects, or those that have simply mismanaged their funds, to exit the stage, some less gracefully than others. We have already seen a couple of NFT projects rug pull on their unsuspecting holders, and one thing is for sure – there will be plenty more as the bear market progresses.

NFT Cycle Will Mirror ICO Phase

In many ways, the NFT market mirrors the projects that raised millions in ICOs throughout 2017 and 2018 – a bunch of absolute chancers with avatars for profile pictures collecting millions of dollars at a time when it seemed like the only thing they could do in the market was make money.

However, as these same ICOs found when the 2018/19 bear market took hold, that money runs out – and quickly, if you don’t cash it out while the going is good. 26-year-old Vietnamese National Le Anh Tuan, creator of the Baller Ape NFT Club, is the first NFT project creator to have been charged with performing a rug pull (or, more formally, with one count of conspiracy to commit wire fraud and another conspiracy to commit international money laundering), but he will not be the last. Far from it.

NFT Bubble Pop Will Kill Projects

Many NFT project creators will have wasted most of the money they raised in the initial minting on entertainment and expensive luxury items, thinking that the rest would last forever. These projects also receive a percentage of each fee when an NFT changes hands, and with drawings of rocks selling for millions of dollars, times were good. However, the bubble has popped – big time:

NFT sales are down to levels not seen since mid-2021, leading to a huge reduction of income for every single NFT project. With no new money coming in, all that’s left is what was obtained at the initial minting, which relies entirely on how they managed the funds (Substratum, anyone?).

What this means is that there are hundreds, thousands perhaps, of NFT projects out there that are telling buyers in their Discord group that they are working hard in the bear market to build the project, using the time to focus on making it the “best it can be”, when actually they are working out how to disappear with what little funds remain without being caught.

Of course, an NFT is only financially viable as an investment if the project is still active at the very least, which means that those who bought up the latest NFT earlier this year and are waiting until the market returns to cash in might find that, like Tokenpay, Zrcoin and, yes, Substratum, the market returns without them.

The post NFT Rug Pull Season is Upon Us appeared first on FullyCrypto.

Related Posts

Brazil’s Largest Broker XP Just Launched Bitcoin Trading Services

The broker has 3.6 million users and its new trading platform developed in partnership with the Nasdaq can scale to support one million users for bitcoin trading….

NFT Games Are Better Than Traditional Games, Urvit Goel

The gaming industry is one of the oldest in existence. But changes came to the sector with the advent of blockchain technology and NFT. Now, a lot…

Sri Lankans Scammed out of Millions by Fake Crypto Schemes

Ponzi scammers are compounding the economic misery of Sri Lankans by swindling them out of their savings with bogus crypto schemes. Crypto investor Harshana Pathirana told Al Jazeera: “I…

ETH Rejected From $2K, Here’s the Critical Support to Hold (Ethereum Price Analysis)

Ethereum has experienced a 6.6% correction from the daily high it recorded at $2012. The critical support level lies in the price range between $1700 and $1800,…

Cardalonia Debuts Metaverse Map Demo, Prepares For Exchange Listing As 70% Of Lonia Token Presale Allocation Gets Filled

Cardalonia, a play to earn medieval-themed Metaverse project built on the Cardano blockchain, has released the initial demo of their metaverse map ahead of their Cardalonia Land…

U.S. Senators Call for Withdrawal of Crypto Guidance in Open Letter

U.S. Democratic Senators Elizabeth Warren, Sheldon Whitehouse, Bernard Sanders, and Richard J. Durbin wrote to the Office of the Comptroller of the Currency (OCC), expressing concern that…

Generated by Feedzy