Beware Of The Soft Rug Scam Currently Plaguing Decentralized Finance

Beware everyone, the soft rug scam is making the rounds….

“Soft rug” is a term used to refer to devs taking the time to slowly pump up their assets, while dumping a bunch of their coins behind the scenes.

This is just as bad if not worse than the “rug pull” scam that some people encounter which involves devs just abandoning a project and running off with the goods—leaving everything in ruin.

A good way to avoid getting tricked into investing in a bad project is to always look at the team, use cases, and fundamentals (if they are available) for the firm, or team working on that particular crypto project.

Here’s a look at how to further identify and avoid this type of scam and stay safe:

looks like flagship @binance project @VenusProtocol’s core team (@Swipe) pulled a soft rug

for lending protocols, sound governance isn’t everything, it’s the only thing https://t.co/MDVMrw7I4y

— monetsupply.eth (@MonetSupply) June 22, 2021

Coin Telegraph brought the matter to our attention:

The team from Polywhale, a Polygon-based yield farming project, announced that it would be ceasing work on the platform in a Reddit post on Sunday. Two days later, it was discovered by token holders that the project’s treasury wallet had been emptied.

As reported by Cointelegraph, Polywhale Finance’s founders were accused of pulling a soft rug by selling their tokens during the latest crypto market price collapse. The project’s native token, KRILL, has collapsed to $0.17 from a high of $7 at the beginning of this month.

The Defiant reported on another claimed soft rug involving Swipe, which developed Binance Smart Chain’s third-largest protocol, Venus.

Beware of soft rugs!
similar to a rug pulls.
A soft rug is when a decentralised crypto asset gets investors to invest in their project with hopes of development, but the developers slowly dump their coins exiting the project and leaving investors with empty promises. #Altcoins https://t.co/hHpjL4mcTm

— Crypto Tycoon (@MylaRusty) June 24, 2021

OpEn miNdED crypto investors catch a break with a "soft" rug pull. https://t.co/CK8FQ554Y8

— Bruce Hodl Lee (@hardmoneyhunter) June 22, 2021

Crypto Briefing added:

Even though the team blames its exit on tokenomics, there are indications of malicious intent. The official Telegram chat group has been deleted and there is a consensus among community members that the project was a potential scam.

Community members describe the incident as a “soft rug,” a situation when project founders abandon a project after dumping their own tokens on the market in exchange for stable coins.

Polywhale Finance was launched in April 2021 by an anonymous team. It functioned as a yield farm, offering its users a chance to make incredibly high returns on their deposited funds.

 

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