Scammers are always innovating new, creative ways to delve into the pockets of people and walk away with millions of dollars. One of the most popular scams grabbing the attention of the general public is the abuse of cryptocurrency.
The most common cryptocurrency fraud being used by scammers across the world is known as a “rug pull.”
A rug pull scam is when someone or some corporate entity creates a new cryptocurrency and buys a large sum of the coin before releasing it to the public. After releasing it, a large advertising campaign is created to push the popularity of the coin so that others feel tempted to buy it.
Then, when the coin has reached great value due to its popularity, the creators sell everything they have, plummeting the coin’s value and leaving those who purchased the coin completely out of luck.
However, this scam is not an entirely new concept. Economics instructor Phillip George explains the history of this scam. “The rugpull is nothing new. Back in the 1920’s, rugpulls took place in the stock market almost all the time until the Securities and Exchange Commision (SEC) was founded in the mid 1930’s to protect the stock market,” shared George.
Despite the fact that rugpull scams are now monitored by the SEC, criminals have found new ways to navigate around legal legislation and are using cryptocurrency due to the lack of legislation compared to the stock market.
Several influencers have taken part in crypto scams and have robbed millions of dollars from investors due to their influential platform they hold on the internet. Some of these include Hailey Welch, famously known for her catchphrase “Hawk Tuah,” who has turned criminal and has gone silent since their crypto collapse.
“I bought $1 of Hawk Tuah coin as a joke knowing I’d get no financial gain from it, so it was absolutely no shock when I lost that $1, it was very funny for me but I can see why it was devastating for others,” shared senior Andrew Erickson.
Hawk Tuah coin (HAWK) rose to a $400 million market cap and plummeted to $200,000 in less than 24 hours. One wallet in particular made over $365 thousand while all other investors are suffering substantial losses.
While Welch was involved in the project, the coin was actually launched by overHere LTD which Welch worked with. Despite the company and Welch robbing millions from investors, her legal consequences remain unknown.
“She most likely will not face any legal consequences besides maybe fines from the government or civil lawsuits. The crypto market is still not well regulated so she most likely won’t face any felony charges,” added George.
However, the future of crypto legal regulations remains uncertain. President-elect Donald Trump boasts that he will turn the US into the “crypto capital of the planet” and favors an unregulated market for cryptocurrency.
As the Cryptomarket only expands in popularity after the boom of bitcoin, potential investors will continue to jump on risky ventures to avoid missing out on another potential bitcoin, despite the possibility of being scammed. With the lack of regulation to stop these scammers, the crypto market will only continue to see these high-profile robberies take place.
