NFT Rug Pull Season is Upon Us #NFT #Rug #Pull #Season Welcome to Lopoid
Reading Time: 2 minutesNFT 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.