What is a 'rug pull' in NFT?

The developers of an NFT collection called Frosties vanished in a potential "rug pull." The anonymous creators disappeared on their investors who had purchased all 8,888 tokens, according to Blockworks. A rug pull is a type of scam in which creators quickly cash out their gains after launching a crypto project.

Are rug pulls a form of crypto fraud?

Rug pulls have become a major form of crypto fraud, making up nearly 40% of crypto scams and costing users about $2.8 billion last year, up from just 1% the previous year, according to Chainalysis. Blockverse. Blockverse is the latest NFT project to rug pull, raising questions on the authenticity of projects by anonymous developers.

Are hard rug pulls illegal?

Source: nft now Hard rug pulls, which occur when a project’s founder uses coding to maliciously use the project as a way to defraud investors, are completely illegal. In this case, the smart contract contains hidden terms in its code that are designed to dupe investors with the intent to steal funds.

What is the 'rug pull' scam?

A new type of scam has emerged in the hype-filled world of cryptocurrency: the “rug pull.” The scam, which gets its name from the expression “pulling the rug out,” involves a developer attracting investors to a new cryptocurrency project, then pulling out before the project is built, leaving investors with a worthless currency.