Fool’s Gold: Alt-Coin Rugpulls and Downright Dirty Scams

The allure of cryptocurrency has most certainly captivated investors in Canada and across the globe — and cases of immense returns and financial freedom have left many eager to dive in and get a chunk of profit pie. With that said, the crypto landscape is rife with risks, including numerous alt-coin scams, rug pulls, and fraudulent schemes. This article serves up some of the most notorious instances of these deceptive practices, highlighting the need for ongoing vigilance in this rapidly evolving market. Let’s take a look at some examples.

What the Heck is a “Rugpull”?

A rug pull occurs when developers of a cryptocurrency project abandon it abruptly, withdrawing all funds and leaving investors with worthless tokens. You know, like pulling the rug out from under someone in a cartoon, except for victims — it’s no joke. This scam can be categorized into "hard" rug pulls, where malicious code is written into the project's smart contracts, and "soft" rug pulls, where developers simply dump their assets, causing the token's value to plummet. The history of cryptocurrency is littered with such scams, each seemingly more elaborate than the last, causing billions in losses for investors.


One of the most infamous examples of a rug pull is Bitconnect. Launched in 2016, Bitconnect promised high yields with up to 40% returns per month. The aggressive marketing campaign attracted a massive number of investors, making Bitconnect one of the most prominent names in the crypto space at the time.

How to spot scams before they happen: watch this video of a Bitconnect conference. If somebody is doing something like this, or behaving in this way, the likelihood of them being legit is very, very low.

At its peak, the Bitconnect Coin (BCC) reached over $400 in December 2017. Regulatory scrutiny from the US and UK led to the project's shutdown in January 2018, causing a 92% crash in BCC prices. The creators vanished with over $2 billion, making Bitconnect one of the most notorious crypto Ponzi schemes. Read the BDO Canada case files summary here.


OneCoin stands out as one of the largest cryptocurrency scams, with losses estimated between $4 billion and $10 billion. Marketed as an educational platform with its cryptocurrency, OneCoin never traded publicly and had severe trading restrictions. Investors were lured by the promise of educational courses and mouth-watering returns. The scam's leaders were arrested in 2017, but key figures, including founder Ruja Ignatova, remain at large. In terms of the scale of the scam, the world witnessed the vulnerabilities in the breakout crypto market and the need for stronger regulatory frameworks to protect against such fraudulent undertakings.

Squid Game Token

Riding on the popularity of the Netflix series, the Squid Game token (SQUID) launched in October 2021. The token saw a meteoric rise, increasing by nearly 23 million percent in just a few days. Investors, enticed by the association with the hit show and the promise of high returns, flocked to buy the token. But, when investors attempted to cash out, they found they could not sell their tokens. The developers then disappeared, having made off with an estimated $3.3 million. This scam yet again highlights the dangers of hype-driven investments and the importance of thorough research before investing.


Animoon, an NFT project claiming to partner with Pokémon, promised substantial returns and various benefits to its investors. The project boasted partnerships with official Pokémon partners and promised a host of exclusive benefits, including play-to-earn games and fixed income for certain NFT holders. After raising $6.3 million, the project went silent, with the team gradually distancing themselves from the project. This case illustrated how scammers could leverage popular brands and the NFT craze to defraud investors.

Luna Yield

Luna Yield, a yield aggregator on the Solana blockchain, appeared legitimate due to its associations with reputable projects. The platform promised high returns through yield farming and liquidity provision. But, three days after its Initial Dex Offering (IDO), the developers transferred the funds to an untraceable service and vanished, resulting in a $6.7 million loss for investors. Luna Yield is a great example of a rug pull that doesn’t look like a rug pull. It didn’t use many of the tactics other rug pulls do and instead relied on its seemingly legitimate setup and associations.

Evolved Apes

Evolved Apes was another NFT project that turned out to be a scam. The project, which launched in September 2021, sold out in under 10 minutes, raising significant capital. Just a week after the launch, the project owner, known as "Evil Ape," withdrew 798 ETH (worth $2.7 million then) of investor funds. The owner then took down the project's website and social media pages, leaving investors with worthless NFTs. This scam highlighted the risks associated with the NFT market and the need for due diligence.

Canadian Context

While these scams have affected investors globally, Canadian cryptocurrency users are not immune. Non-custodial Canadian crypto exchanges like allow Canadians to buy and sell bitcoin and ethereum securely. The broader alt-coin market remains a potential minefield. Regulatory bodies in Canada, such as the Canadian Securities Administrators (CSA), have issued warnings about the risks associated with cryptocurrencies, emphasizing the importance of due diligence and skepticism towards too-good-to-be-true offers. The CSA has also been active in educating the public about the risks of investing in unregulated digital assets and the importance of understanding the projects and teams behind any investment.

How to Protect Yourself

Investors can take several steps to avoid falling victim to such scams. Firstly, research the team behind the project. Make sure the project's developers are known and reputable within the crypto community. Second — check if the project's liquidity is locked in time-locked smart contracts. Verify that the liquidity is secured through contracts lasting three to five years from the token’s initial offering. Next, look for any external audits of the project's code to identify potential vulnerabilities. Audits by reputable firms can provide some assurance of the project's legitimacy. Also, remember to be cautious of new tokens experiencing extreme price spikes without a solid user base. Such price movements can be indicative of pump-and-dump schemes. Lastly, be skeptical of projects promising unusually high yields without clear mechanisms. Remember the golden safety rule: If something sounds too good to be true, it probably is.

The history of alt-coin scams and rug pulls serves as a cautionary tale for investors in the cryptocurrency space. While the potential for high returns exists, so does the risk of significant losses. By remaining vigilant and conducting thorough research, investors can better protect themselves from falling prey to these fraudulent schemes. Investing in bitcoin and ether in Canada through can offer a safer alternative to the volatile and often risky alt-coin market. Stay informed, stay cautious, and always prioritize due diligence in your investment strategies.

Published: 2024-06-18


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