Just a day after its introduction on crypto exchange giant Coinbase and its recently launched Base network, a new memecoin has already been labeled and considered a “rug pull” after the token’s deployer removed $25.6 million dollars in liquidity from the network.
BALD, which dropped yesterday, pokes fun at Coinbase CEO Brian Armstrong’s lack of hair. And since yesterday’s deployment, which garnered a 3,000% increase in BALD’s overall value, the coin has already plunged by 92%, according to data from CoinGecko.
The Onchain Intrigue Telegram Channel, which monitors such activities, traced the wallet associated with the BALD token, revealing that the wallet went back onto the decentralized exchange LeetSwap to purchase more BALD tokens, while simultaneously sending a very strange tweet that appears to be guiding users to buy more of the token – before removing all the liquidity again.
Following a number of allegations that the memecoin was a scam, that same account (@BaldBaseBald) denied any allegations of having sold the tokens, instead, claiming to have “added/removed 2 sided liquidity and bought.” However, another user contradicted this statement, who highlighted that the token had indeed been sold.
Cool story bro but as you know, when you add 2 sided liquidity and price goes up, the AMM is selling tokens in exchange for ETH in the pool.
So yes, you did in fact sell a lot of tokens and now have a lot more ETH.
Not judging you, just making it crystal clear.
— StealthElectronVIP (@StealthElectron) July 31, 2023
In a recent interview with Decrypt, Matt Aaron, the project lead at Cielo, which oversees Onchain Intrigue, described this situation as “puzzling” because the wallet moving the funds was considered to be a “sophisticated whale” that holds large amounts of Coinbase’s Ethereum liquid staking token cbETH, which can be bought, sold, and swapped for other digital assets.
Aaron also added that this same wallet “allegedly…KYC’s their wallet on a centralized exchange.”
Crypto Twitter commentators have been closely following the unfolding events, with some even speculating that former FTX CEO Sam Bankman Fried or another highly-situated former FTX or Alameda executive could be the developer behind the ill-fated memecoin. Observers pointed to FTX and Alameda deposits in the developer’s wallet’s transaction history over the span of more than two years.
– Thousands of ETH between FTX and Bald
– Bald deployer was first voter on all sushi proposals
– Bald deployer tweets same sentence structure as SBF
– Bald deployer was biggest DYDX farmer
– Bald deployer DYDX posts sound like SBF
— hype (@hype_eth) July 31, 2023
However crypto journalist Tiffany Fong was quick to shoot down the SBF speculation, citing the limited phone, laptop, and Twitter access in his current bail conditions.
Guys, SBF hasn’t had access to a normal phone or laptop since April 2023 when his bail conditions changed. He’s basically been using a flip phone without internet connection & a laptop with restricted access to whitelisted websites (e.g. NYT, WSJ, Courtlistener, etc).
— Tiffany Fong (@TiffanyFong_) July 31, 2023
Who do we blame?
A “rug pull” in the crypto world refers to a deceptive strategy where developers introduce a new token, create an illusion of its legitimacy, and then abruptly withdraw the liquidity, leaving investors in the lurch.
The incident with the BALD token underscores the challenges and vulnerabilities inherent in an evolving crypto landscape that has no legitimate regulatory framework to govern cases of misuse and abuse to the detriment of investors.
Unfortunately, the risks we have continued to see within DeFi only adds a stronger onus on regulators, but also platforms to implement robust security measures to help safeguard these types of scams. But, can a “rug pull” actually be prevented at this current stage of where we are at?
Coinbase, which is considered to be the world’s largest cryptocurrency exchange, will likely face increased scrutiny in the wake of this incident. How the company responds and the measures it adopts will be closely watched, not just by its user base, but by the broader crypto community.
Editor’s note: This article was written by an nft now staff member in collaboration with OpenAI’s GPT-4.