The word “running” (literally “pulling the carpet”) does not have any positive connotations. It means either someone is going to fall and eat shit, or the furniture is going to tip over, or in the world of NFTs, it means a lot of people are going to lose a lot of money.
A runaway scam refers to the fact that the project side in the encrypted world quickly abandoned the project construction after attracting early investors to join. They either fly away with project funds or sell those pre-minted assets. In either case, this is done to steal all the money from the project community.
For those project parties who want to run away, when the price of NFT rises to their satisfaction, they will rush to transfer funds from the project ecology, and immediately disappear, leaving only those investors who have almost no legal resources. So now, welcome to the dark side of Web3.
In recent years, some high-profile runaway incidents have become the sobering words of NFT risk. We’ve compiled a short list of some of the most memorable (and costly) runaways that have happened in this ecosystem. If there is anything to be gained from these incidents, it is that it educates people on how to more effectively identify and avoid NFT scams.
Bingbing bear coldly swept away $1.3 million
Launched on January 7, 2022, Frosties is an ice cream-themed collection containing 8888 NFTs. Forsties sells itself aggressively as a “cool, delicious and unique” project. Founders Ethan Nguyen, known as Frostie, and Andre Llacuna, known as heyandre, have built a sizable community on Discord and have pledged to provide collectors with merchandise, sweepstakes, and a fund to ensure the project’s long-term development.
These NFTs are priced at 0.04 ETH each. That is to say, as soon as the NFT series sold out a few hours later, the project team swept away 335 ETH (more than one million US dollars). The project’s website and Discord quickly disappeared, and the sale proceeds were moved to multiple wallets. People who buy into the community have no way to contact the founders and have nothing but their digital artwork and unhappiness.
Unfortunately for Nguyen and Llacuna, it comes at a time when the Justice Department is starting to pay close attention to fraud cases in the cryptocurrency world.
On March 24, 2022, after a two-month investigation, prosecutors from the Southern District of New York reportedly arrested two people and charged them with conspiracy to defraud and money laundering on the grounds that they “promised investors the benefits of Frosties NFTs” , but after the sale … took away the victim’s assets, shut down the website almost immediately and moved the funds”.
The case is still pending, but the matter is widely regarded as the Justice Department’s first NFT runaway case and a momentous moment in NFT history.
Daddy Ape Club
Big Daddy Ape Club was supposed to be an ape-themed NFT series planned to be minted on Solana and sold on the Solanart market, with a total of 2222 pieces.
As Solana’s largest off-road project, Big Daddy Ape Club has investors in pain. Most running projects can still see the project party come up with some NFT works, and then take the money and run away, but Big Daddy Ape Clue is not the case, the project managed to get 9136 SOL (about 1.3 million US dollars at the time), saying It is used to mint NFTs, but these NFTs never existed.
Sadly, the Big Daddy Ape Club shut down and deactivated the project’s Discord a few hours before the minting, and the project’s Twitter account and website quickly disappeared. None of the investors received the NFTs they paid for.
The project was already pre-verified by Civic, a decentralized identity verification company, so the run away was particularly irritating. To its credit, Civic CEO Chris Hart and the entire company are cooperating with law enforcement to apprehend these crooks.
The run of the Ball Ape Club arouses the attention of the Ministry of Justice
Another ape-derived NFT project team has a tough time these days. Baller Ape Club founder Le Anh Tuan was recently charged by the Department of Justice with conspiracy to commit wire fraud and transnational money laundering.
Tuan allegedly took $2.6 million from Baller Ape Club investors, then deleted the project website and laundered the money. According to the Justice Department, Tuan exchanged the money for various cryptocurrencies and transferred it to several different blockchains, a process known as “cross-chain.”
The Justice Department designated the case as “the largest NFT scam to date.”
Evil Ape Played Evolution Ape NFT Community
The founder of Evolved Apes is an anonymous pseudonym Evil Ape. Just a week after the series launched, he managed to successfully snatch 798 ETH ($2.7 million) from the project’s investors. Evil Ape’s Twitter account and project website no longer exist.
The total issuance of Evolved Apes is 10,000 NFTs. Quite ironic is the description of the project: “Into a place beyond the law”. The project originally wanted to make a fighting game similar to Axie Infinity. But needless to say, the game was never implemented. However, this series still exists on OpenSea, although the floor price has not unexpectedly dropped to 0.01ETH.
Pixel sprite about to run away
Pixelmon doesn’t quite fit the strict description of running. However, it is still very close to the run-off form and is seen in the NFT community as a valuable lesson in hype and credibility. This project contains 10,005 pixelated NFT characters and was released on February 7, 2022. Previously, the project team had done a pretty good job of piling up people’s expectations for the series and the project’s prospects as high as a mountain.
Pixelmon promises to create a AAA open-world-style adventure game with a nostalgic low-resolution pixel art that conjures up a Pokémon universe set in Minecraft. According to its founder, Martin van Blerk, the team behind the project has worked at companies like Disney and Activision, which fuels hope that these NFTs will be different once they are released. The Pixelmon team’s announcement that NFT minting will take place in a Dutch auction with a starting price of 3ETH reinforces this notion.
The first 8,079 NFTs were sold out within an hour of the minting event, and most buyers paid the full 3ETH. By the end of the sale, the Pixelmon team had collected 23,055 ETH (over $70 million).
It wasn’t long before community concerns began to surface, as there was still only sporadic information on team identities and game details. Moreover, the NFT works are still not public. So within a few hours after the release, the transaction price in the secondary market plummeted to around 1ETH.
Collectors were baffled when NFT creations were finally revealed to the community on February 16. Compared with the works previously used by the project party to provoke the community, the final delivered works are quite different, to put it mildly. These pixel art works look very amateurish, and many are even absurd. It’s not that pixel art or any form of art has no value to the NFT community, it’s just that community members feel like they’ve been scammed out of their money. Many NFTs have rendering issues, upside down, or even fail to swipe. Most designs are repetitive, with little or no change in design.
There have been repeated accusations against founder van Blerk, who is believed to have withdrawn funds from the project to buy blue-chip NFTs such as Bored Apes, Azukis, CloneX, Invisible Friends, etc. These accusations further increased fears that the project would run away.
While Pixelmon has fixed the rendering issues, its founder took to Twitter to apologize, admitting that the NFT launch was (to put it mildly) rough. The project seems to be rebounding recently. The current floor price of Pixelmon is 0.21ETH, and some of these ugly NFTs have been sought after by cults, and the price once reached 2ETH, 4ETH, and even 5ETH.
In a similar runaway event, this is the best result you can hope for. In any case, Pixelmon’s case is a cautionary tale. In the NFT world, FOMO (Fear of Missing Out) is a powerful but sometimes dangerous thing.