Markets News Report
April 24, 2023

Understanding Rug Pulls: Researchers Analyze 700 NFT Scams in New Study

In Brief

A new study by three researchers from the Indian Institute of Technology and Merkle Science India analyzed more than 700 NFT rug pulls that occurred between June 2021 – December 2022.

The study found that the founder of Azuki created other rug pull NFT projects.

The paper identified 20 groups of creators behind multiple rug pulls.

Understanding Rug Pulls: Researchers Analyze 700 NFT Scams in New Study

An academic paper titled “Understanding Rug Pulls: An In-Depth Behavioral Analysis of Fraudulent NFT Creators”, written by three researchers from the Indian Institute of Technology and Merkle Science India, examines more than 700 NFT rug pulls that took place between Jun 2021 and Dec 2022. It looked into “the structural and behavioral properties of these schemes, identify the characteristics and motivations of rug-pullers, and classify NFT projects into groups based on creators’ association with their accounts.” 

The study shows how often a project founder created other rug pulls. For instance, it claims that Zagabond, the founder of Azuki, was responsible for creating CryptoPhunks, CryptoZunks, and Tendies. Researchers claim that one NFT collection attempted as many as 37 rug pulls in a span of three months.

via https://arxiv.org/abs/2304.07598

The research identifies 20 groups of creators who are responsible for multiple rug pulls, including American social media personality and professional boxer Jake Paul, the brother of Logan Paul.

via https://arxiv.org/abs/2304.07598

NFT Ethics, a Twitter account that “uncovers inconvenient truths” about the most influential players in the NFT space, pointed out that the study is incomplete as it doesn’t mention “Mark Cuban’s rug pull factory.” On Apr 20, NFT Ethics claimed that it had gotten confirmation from “multiple sources” that the team behind Mark Cuban’s “@NFT” Instagram page “actually created NFTs for the celebrities that they worked with.”

NFT Ethics had previously warned followers that the “@NFT” Instagram page was behind many scams and rugs in the space. 

The paper also found that at least eight of the 20 groups of creators are directly linked to each other, suggesting how centralized these scams are. According to NFT Ethics, the founders of rug pull NFT projects are often friends or family members and employ the same influencers, artists, solidity devs, and mod teams to promote their projects.

It is important to note that the paper has not yet undergone a rigorous peer-review process, and further research may be necessary to confirm its credibility. Nevertheless, the study provides valuable insights into the world of fraudulent NFT creators and how they operate.

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About The Author

Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via [email protected] with press pitches, announcements and interview opportunities.

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Cindy Tan
Cindy Tan

Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via [email protected] with press pitches, announcements and interview opportunities.

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