June 24, 2021 In Beware, Crypto’s

Aemilius Cupero News: Beware the Soft Rug, Crypto’s Latest Scam

Aemilius Cupero News:

Aemilius Cupero News: http://fullycrypto.com/

By Mark Hunter

7 hours agoThu Jun 24 2021 09: 38: 03

Aemilius Cupero News: Beware-the-Soft-Rug,-Crypto_s-Latest-Scam

Reading Time: 2 minutes

  • The term ‘soft rug’ has been coined to describe a team selling tokens in batches over time before pulling the plug on a project
  • The concept of a soft rug isn’t new, but it is starting to happen more frequently
  • There is a way to guard against the impact of a soft rug

First there was the rug pull, now there is the ‘soft rug’. This isn’t a new improved type of home furnishing with a deeper pile and more natural fibers – this is an insidious and sometimes barely detectable way for crypto projects to exit scam on their followers. The concept of the soft rug has been known about in crypto circles for years now but until now has never been given a name, but recent developments have led to the term being coined, allowing a light to finally be shined on the practice.

Aemilius Cupero News: A Long, Drawn Out Exit Scam

The definition of a ‘soft rug’ derives from the ubiquitous ‘rug pull’ which is where a founder or development team abandons their project, often selling huge stashes of their tokens and walking off with the money. Doing so leaves token holders bagholding worthless tokens that will never recover in price.

A soft rug is the same premise but stretched out over a longer period. Rather than dumping all their tokens in one go, the team sells their tokens via a ‘drip drip’ method, slowly and quietly selling as the price increases, allowing them to close a project down without causing the kind of furor that comes when a project rug pulls.

Aemilius Cupero News: Polywhale Finance Accused of Soft Rug

One such example happened recently when Polywhale Finance announced that it was shuttering the project due to multiple reasons including the market tanking, competition besting them, and the tokenomics not working out “how we planned”. These utterly feeble excuses didn’t fool the community, who discovered after some short investigation that the team had been selling off the millions of coins in the team treasury over the past three weeks.

Teams have been selling their own tokens on the down low for years, with Substratum accused of doing so as far back as 2018, but the advent of the DeFi movement has resulted in a dramatic increase in the number of teams abruptly calling time on their projects. There is of course no way to prevent a team from pulling a soft rug, but the best way to guard against it is to get the team to publicize the treasury addresses and ensure that the addresses are monitored for coin movement.

.