Another “rug pull” takes place, taking a $1.5m market cap Ethereum coin to $15,000
It appears that another DeFi “rug pull” has taken place as investors continue to throw money at an array of Ethereum small caps, even if they don’t have fully-developed products or long-standing teams.
A project that is known as DistX has seen its native token crash by literally over 99 percent in the past 36 hours, falling from a $1.5 million market capitalization to $15,000 as of this article’s writing.
Per CoinGecko, the project launched in August and peaked at a $5.5 million market capitalization.
DISTX plunges 99% as project suddenly closes down
Launched in August, DistX promised to be a platform to allow founders to easily operate token sales.
The project worked, hence the rally in the coin’s market capitalization. Multiple presales were conducted via the platform while there were plans for greater ambitions in the coming weeks.
But, two days ago, a project founder announced that they would be ending the project due to “family things” and due to the presales conducted on their platform failing to garner traction:
“Hey guys, if anyone has been following along the last week you know this has been an extremely hard week for us here at DistX and me personally. While family things are going on, our 4th sale ended without reaching softcap (other than the adjustment) and because of that our price has been in freefall,” the founder wrote.
He added that he thinks the tokenomics of the projects were “flawed from the start,” meaning that it made sense for them to close down the project and move on.
To DistX’s credit, they said that they would not withdraw any of the liquidity and would liquidate the rest of their funds into the DISTX coin to help investors benefit.
“If all you care about is this, know that we aren’t removing liquidity and with the remaining company funds (95k USD) we will be buying DistX from Uniswap and burning it to help you guys cash out at a higher amount.”
While attempts were made to exit this amenably, investors in the project see this as a slap in the face, as made clear by the message seen below.
Another team of criminals rugging at $DISTX– in telegram telling some pitiful story about having to give up because they only have 3 months of money left. I hope they get dox’d and prosecuted. https://t.co/bQL1nTvyO8
— rugpocalypse (@KalixSKy) December 15, 2020
The project’s website is still online but all social media handles affiliated with the project have been taken down.
Risk management in DeFi
Whether or not this is a true rug pull, the story accentuates the need for comprehensive risk management in the DeFi space.
The past few days have been marked by multiple rug pulls where users genuinely lost all their capital due to bad actors taking advantage of short-term hype trends and the greedy investor mindset currently sweeping Uniswap.
Prior to this, there have been countless DeFi hacks where dozens of millions have been stolen from users.
DeFi, while a developing asset class, remains nascent and risky.
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