Crypto, in the eyes of those who know the importance of decentralization, is simply giving people financial empowerment and banking the unbanked. But after years of fighting for inclusion, some individuals are using blockchain technology as a playground for heartless scams, ripping off people’s life savings and turning fraud into a multi-billion-dollar industry.
In the latest episode of Trafficked, journalist Mariana van Zeller unpacks the dark underbelly of the crypto gold rush: the rug pull. It’s simple. It’s ruthless. And it’s destroying lives.
“Whenever there’s something out there that it seems like you can make so much money fast, there are a lot of people out there that are just willing to exploit those dreams or those hopes,” said Mariana.
Rug pulls: The perfect crime for the unfazed
Van Zeller interviewed several victims, including one named Xavier, who admits, “I think I’ve been in maybe seven or eight rug pulls. The first time it was just a $500 investment. Then the next one, almost $10,000.”
She asked what he did to recover his losses? His answer: “You just move on. There’s nothing you can do. Decentralized financing. So, there are no rules, nothing applies.”
That statement tells you everything you need to know about why rug pulls are still a thing, even though we have known about them for as long as Bitcoin has been around.
How do rug pulls work? Scammers create a token, load up on it early at dirt-cheap prices, and then blitz the market across every social platform. They use paid shills on X, Telegram, Reddit, and YouTube to pump the price.
Unsuspecting investors jump in, thinking they’re catching the next Bitcoin. Then, the creators vanish, cashing out while the token collapses, leaving everyone else holding worthless digital bags. According to the FBI, rug pulls now account for 37% of illicit crypto revenue.
Pulling everything beyond rugs
Records from the California Department of Financial Protection and Innovation show a disheartening 372 entries of fraudulent activities.
In the top most entry, submitted in the US, a 68-year-old man lost over $565,000 after a suspicious transaction from Coinbase into his checking account vanished.
In California, a family member was scammed on WhatsApp after being lured into a fake crypto platform, Goomarket LLC. He was tricked into thinking he made $5.3 million. But when he tried to withdraw, the platform demanded taxes. He paid. Then came more demands, for money laundering clearance. Eventually, he realized he’d lost $540,000, and the website vanished.
“We don’t care”: the scammer mindset
In van Zeller’s documentary, she interviews three masked scammers who refer to rug pulls as a “legal way of stealing.” One, calling himself Mr. X, boasts: “You just got to get it. We don’t care.”
She presses him about the people who lost their life savings, some gave up their homes, some committed suicide, and others sacrificed retirement funds
“If you are going to invest your life savings in a coin, you should take five minutes to do a Google search … they are the most stupid people on earth,” Mr X reckoned.
This, right here, is the dark heart of the modern fraud economy: callous, confident, and utterly devoid of empathy.
Crypto index fund Bitwise says Q4 2024 will be remembered as “one of the most important in crypto’s history.” Unfortunately, it might also be the moment fraud truly scaled. As John Wilson of Forta notes, “phishers and scammers are nothing if not opportunistic.”
