A 22-year developer behind Encryption A.l, a cryptocurrency project, has rug-pulled users of roughly $2 million ahead of the platform’s liquidity migration. In a screenshot shared on July 3 and posted on Twitter, the developer apologized, saying that while he “deeply regretted his actions and impact on users, he was battling a crypto-gambling addiction that has seen him lose over $300,000 in the past few months.”
The decision to rug-pull user funds and make away with $2 million was, it appears, a way of recouping his crypto gambling losses.
OxEncrypt Prices Crash After Rug Pull
According to data from DEXTools, the prices of OxEncrypt slumped by over 95% following this decision, crashing from over $3.25 to as low as $0.02 by the time the screenshot was shared. The token was only available for trading on Uniswap, the world’s largest decentralized cryptocurrency exchange.
OxEncrypt was the native token of Encryption A.l, a cryptocurrency project that claimed to be building “an arsenal of tools to empower traders and developers.”
Among some of the tools, the platform allowed the creation of Telegram bots which the developer said would instead allow the owner to trade decentralized finance (DeFi) instruments much more efficiently.
The team added that their bots use different algorithms to encrypt smart contract addresses so they aren’t detectable to “sniper bots and Telegram bots.” Among these tools include a Wallet Analysis Tool that gives a detailed report about a wallet’s balance; and a Fresh Wallet Detective tool for picking out the first 100 contract buyers.
Encryption A.I Steals User Funds Before Migration
In a post on Twitter, the platform was supposed to migrate on July 3 but added another 48 hours extension for users to migrate via DEXTools. The purpose of the migration was to, among other enhancements, improve the platform’s functionality and address other concerns raised by community members.
Going by the timing of the rug pull, it appears the developer took advantage of the increased tokens locked in the project’s liquidity pools on Uniswap to steal user funds. Typically, a hard rug pull executed by the developer means the project has been effectively abandoned unless it is revived by the community who saw value in the platform.
On the other hand, investors who had committed to the project have been left holding worthless OxEncrypt tokens. Moreover, unless the developer is sued, victims could have no recourse. This reality is considering the trustless, global, and immutable nature of Ethereum smart contracts enabling token locking and trading on Uniswap.
Feature image from Canva, chart from TradingView