Rug Pull Roundup: Week of October 8, 2023

Rug pulls and exit scams occur when the team behind a crypto project drains funds from it and often disappears. These hacks could involve selling off the large holdings that these teams reserved for themselves or may involve taking advantage of a backdoor built into the project’s smart contract to drain funds from it.

After a surge in rug pulls this summer, large-scale rug pulls became non-existent for a couple of months. However, this week, there were a couple of projects that carried out suspected rug pulls.

Inside the Rug Pulls

In the week of October 8, 2023, there were a couple of projects that performed rug pulls with values of more than $1 million.

Lucky Star Currency

Lucky Star Currency is an NFT project with a Chinese astrology theme. The project has been around since July 2023, but it launched two new contracts  — AwardCentre and NFTMerge in late September.

This week, the deployer address used the privileged withdrawToken function in each of these contracts to drain 1.65 million and 1.45 million LSC tokens from them. These tokens were then swapped to BSC-USD tokens before being transferred to a new address. The LSC team claimed that this potential rug pull was a hack and that new contracts would be deployed soon.

FSL

FSL was a relatively new token, with the contract launched only about a day before the rug pull. In this case, the deployer minted themselves 100 million FSL tokens as part of the deployment transaction.

After the token had gained some value, the deployer transferred 97 million of these tokens to a new address, which swapped them for BSC-USD. In total, the rug pull netted the attacker an estimated $1.68 million. These tokens were then sent to the Tornado Cash mixer.

Protecting Yourself Against Rug Pulls and Exit Scams

Often, rug pulls and exit scams come with warning signs. If a token experiences a significant rise in value without any corresponding development or has a largely anonymous team, this might be a red flag. While these don’t guarantee that the project is a scam, they certainly raise the probability.

Before investing in any project and buying any token, it’s a good idea to do some research into the project and look for potential warning signs of a rug pull. For more information on what to look for and when to just walk away, check out our blog on rug pull warning signs.