Top 5 Rug Pulls in the History of Crypto

Top 5 Rug Pulls in the History of Crypto

Cryptocurrency has opened countless doors for innovation, decentralization, and wealth creation. Yet, the unregulated nature of the industry has also given rise to significant frauds, including “rug pulls” — projects where developers suddenly withdraw liquidity, leaving investors with worthless tokens. Here, we highlight the top 5 rug pulls in crypto history, summarizing their scale, impact, and how they unfolded. Each case deserves its own detailed analysis, which can be explored in separate articles.


1. OneCoin (2014-2016)

Losses: Estimated $4 billion
Token: OneCoin
Key Figures: Ruja Ignatova (self-proclaimed “Crypto Queen”)
Promotion Channels: Conferences, multi-level marketing (MLM), and word-of-mouth

Summary:
OneCoin is one of the most infamous scams in crypto history, but it wasn’t a typical rug pull. Marketed as the next Bitcoin, it lacked a blockchain altogether. Ruja Ignatova and her team used flashy events, celebrity endorsements, and aggressive MLM schemes to lure in investors globally. The project operated like a pyramid scheme, where new investors funded returns for earlier ones.

Ruja disappeared in 2017, just before regulators closed in, leaving millions of investors with worthless “coins.” Despite its collapse, OneCoin highlighted the need for education and due diligence in crypto investments.


2. BitConnect (2017-2018)

Losses: Estimated $2 billion
Token: BitConnect Coin (BCC)
Key Figures: Carlos Matos (infamous promoter), Satish Kumbhani (founder)
Promotion Channels: YouTube influencers, live events, and aggressive online marketing

Summary:
BitConnect promised users astronomical returns through its “lending platform” and proprietary trading bot. Influencers were heavily involved in promoting the project, including the infamous Carlos Matos, whose “BitConnneeeeeect!” chant became a meme.

The project crumbled in January 2018 after regulators began investigating its legitimacy. Developers pulled the plug on the platform, causing BCC’s value to plummet from $500 to less than $1 in days. BitConnect exposed how hype-driven marketing could fuel massive fraud in the crypto industry.


3. Squid Game Token (SQUID) (2021)

Losses: Over $3 million
Token: SQUID
Key Figures: Anonymous developers
Promotion Channels: Media hype leveraging the popularity of Netflix’s Squid Game, social media ads

Summary:
Riding on the massive success of Netflix’s Squid Game, anonymous developers launched SQUID, claiming it was the native token for a play-to-earn game. The token surged from $0.01 to over $2,800 within days, largely due to media hype and FOMO (fear of missing out).

However, buyers soon discovered they couldn’t sell their tokens due to restrictive smart contract coding. Developers drained liquidity and disappeared, leaving investors empty-handed. The SQUID rug pull exemplified how opportunistic scams capitalize on pop culture trends.


4. SafeMoon (2021)

Losses: Estimated $68 million (allegations still ongoing)
Token: SafeMoon
Key Figures: John Karony (CEO)
Promotion Channels: Influencers like Jake Paul, Soulja Boy, and others

Summary:
SafeMoon marketed itself as a community-driven token with innovative tokenomics, including reflection rewards. High-profile influencers were paid to promote the project, sparking massive retail interest.

However, allegations emerged that the team manipulated liquidity pools and misappropriated funds. Lawsuits claim SafeMoon’s structure resembled a Ponzi scheme, with early investors and insiders benefiting disproportionately. While not a traditional rug pull, it highlights the blurred lines between poorly managed projects and outright fraud.


5. Luna/Terra Collapse (2022)

Losses: Over $40 billion market cap wiped out
Token: TerraUSD (UST) and LUNA
Key Figures: Do Kwon (founder of Terraform Labs)
Promotion Channels: Crypto Twitter, venture capital backers, and media

Summary:
The Terra ecosystem’s algorithmic stablecoin UST was pegged to $1 through a complex mechanism involving its sister token LUNA. The project had significant backing from influencers and venture capitalists, creating a perception of stability.

In May 2022, a series of large withdrawals destabilized UST’s peg, triggering a death spiral where both UST and LUNA collapsed. Although not a classic rug pull, many argue that the unrealistic promises and opaque mechanisms behind the project were a ticking time bomb. Investors were left with billions in losses, making it one of the largest crypto disasters in history.


You never know so it is better to trust nobody

These rug pulls underscore the importance of due diligence, transparency, and skepticism in crypto investments. While the promise of high returns can be enticing, the risk of scams remains high. Each of these cases highlights different red flags and lessons for investors, which we explore in greater detail in individual articles:

  1. OneCoin: How MLM and charisma fueled a $4 billion scam.
  2. BitConnect: The collapse of crypto’s biggest Ponzi scheme.
  3. Squid Game Token: The dangers of FOMO and hype-driven investing.
  4. SafeMoon: Influencer-backed projects and the risks of tokenomics.
  5. Luna/Terra: How algorithmic stablecoins led to the largest market crash.

Stay informed and vigilant to navigate the volatile and often deceptive world of crypto investing.

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