NFTs remain untrustworthy and unregulated.
The Classic RugPull
Believe it or not, when things are only worth as much as a group’s belief in them, not believing in those things makes them stop being worth anything. The first one to really hit pop-culture as a rugpull might have been SquidCoin, a cryptocurrency coin that hit the spotlight for being the worst possible understanding of Squid Games’s messaging about money and capitalism. SquidCoin grew in value, and a 45 degree angle up is very attractive to new, inexperienced investors. Once the SquidCoin people made their money, they sold all of their stuff and left, leaving SquidCoin unsupported and the people who bought it with less money than they started with. The classic rugpull. It was a source of ridicule for people on the outside, who saw what had just happened with clear eyes – for people on the inside, it was easier to brush off this early warning and keep investing in crypto.
Ignoring the warning has not made the problem go away. Rugpulls continue to happen because NFTs and Crypto holds next to no actual liability or accountability for the owners. The recent FTX fiasco and the punishment it’s CEO got are a good step in the right direction, but the majority of crypto schemes aren’t tied to national banks. While thinking that internet creators should be allowed to stay anonymous is certainly good and pure-hearted, it’s also allowed the growth of a culture that shames people for, say, revealing information that was already public (https://www.vice.com/en/article/akvn5a/bored-apes-buzzfeed-and-the-battle-for-the-future-of-the-internet) and demanding to know where their money went. Anything less than total positivity and complete freedom for the creators of these projects is scorned. This is the sort of attitude that works for Banksy, not for financial institutions.
Doodled Dragonz is certainly one of the sourest rugpulls out there. Doodled Dragonz was an NFT project that promised to donate 100% of its profits to charities supporting critically endangered species (later choosing WWF instead), only to run off as soon as all the tokens were sold without making said donation. Abandoning a project doesn’t necessarily mean the NFTs generated by it are worthless (I think you can actually still buy other people’s Doodled Dragonz on SolSea), but it does mean the project’s not going to get any new support. If these become afflicted by link rot, they’ll just be gone forever. Besides, a market made purely of vibes isn’t going to support projects with no hype around them, which is ironic because these tokens are now actually scarce.
In an NFT sense, that is.
Since you can still right-click/save.
Users who bought Doodled Dragonz now had a cheap NFT in their wallet that didn’t even contribute to the charities it promised it would.
Later, they did the exact same thing under the alias of Balloonsville, a similar, cutesy project with balloons instead of dragons that also rugpulled. They then criticized the platform for letting this happen, which led to the platform (Magic Eden, for NFTs, which deals in SOL or Solana cryptocurrency) promising not to allow anonymous projects on said platform anymore. Again, anonymity is super cool, but it has a lot of potential for abuse when literally anyone can promise to sell things with no real consequences. Think about it – no other market lets things be so completely untraceable as crypto. Even places like Ali Express can be held accountable by their payment platforms! It’s hard to overstate just how little accountability crypto creators have right now.
At least this time, they allowed their buyers who bought the NFTs at first launch to get a refund if they sold for less than they bought it at as the original owner – the people who bought the tokens after the primary sale and tried to sell them again were illegible for the refund, though, so it still hurt a pretty good-sized chunk of people.
Literally named after the Guy
MadoffCoin was clearly a scam from the get-go, but it promised it wasn’t. Does that mean anything, people wondered? In this totally anonymous, completely untraceable interaction, doesn’t a promise matter at all? The answer was no, although that was apparently only obvious to people outside the hype sphere. MadoffCoin rug-pulled almost immediately after starting up. The website’s been deactivated and the subreddit is close to dead. However, there’s a second MadoffCoin (spelled Madoff Coin this time) attempting to get started, promising that it’s designed to punish people who pull away from the project before everyone gets their investment back. For sure. Totally.
I’d hate to say that this wouldn’t work twice, because it has and continues to – the problem is that not everyone interested in crypto is fully informed of the risks by design. You don’t own the art you buy, and the coins are only expensive because of speculation. Even when they do understand it, their bluster often gets the best of them – a user on Tumblr compared what’s happening with MadoffCoin to Wile E. Coyote painting a tunnel himself and then running into it, insisting it’s still a real tunnel even as the Road Runner watches him make a fool of himself. As long as people keep ignoring warning signs and advocating for a lack of responsibility for the owners, this is going to continue to happen.