- SWAK was an NFT project that saw more than half a million invested in.
- The token had experienced more than 2,300% rise last month.
- Rug pulls continue to happen in the market, which is a stain on its legitimacy.
The SWAK NFT project has executed a rug pull on its investors, leading to a theft of more than half a million. Crypto alert service PeckShield posted an alert on Twitter on March 22, showing that the Binance Smart Chain project has deleted its social accounts and transferred 1,300 BNB using Tornado Cash.
The SWAK project’s social media accounts and website have all been deleted, providing indisputable proof that the project was indeed a rug pull. Address details also show the several BNB transfers taking place, all sent through Tornado Cash, which is commonly used in scams. The latter is a mixing service that scammers and hackers often use to hide their traces.
SWAK NFTs were a type of NFT that is common in the space, namely that each had unique characteristics, totaling at 10,000 individual artworks. These NFTs could be combined to create more combinations. The team also said that it would part with musicians and brands, though of course that never materialized.
The SWAK token experienced a huge increase in price in the months before, going up by nearly 2,350% in February 2022. By all appearances, it seemed to be a typical project, but as is the case with rug pulls, they do well to hide their ill intentions.
Rug pulls are unfortunately still a common occurrence in the crypto market. It is a particular type of theft where the perpetrators typically wait for investors to put in a lot of funds into the project, see the price of the pump, and then siphon the funds and go incommunicado. These scams can occur on any network, and both Ethereum and Binance Smart Chain have experienced many such incidents.
Rug Pulls, a Threat to Market Legitimacy
With the ease with which individuals can create token and NFTs, it can be easy for rug pulls and other scams to occur. This is one of the reasons why some on-the-fence investors still shy away from the market. It has also increased the scrutiny of regulators, who have put investor protection as one of their highest priorities.
Regulators are working to create laws that would mitigate incidents like this, but it’s unclear how they would take action in a space where identities are often anonymous. In some instances, it is possible, but that is rare. On the crypto industry side, projects, and teams are working on such things as crypto investor protection.
Investor awareness is also an important part of the process, and investors are generally becoming more aware about scams. However, with more new investors coming into the market, there will have to be active efforts to ensure that people do not fall prey to scams.