W3M token developers drain 625 BNB worth $235,000

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The developers behind Web3Memes (W3M), a meme coin running on Binance Smart Chain, have drained the token’s liquidity pools by nearly 625 Binance Coins (BNB), blockchain security firm PeckShield reported today. This amount corresponds to approx. $235,000, CoinDesk reported.

PeckShield tweeted about the exploit:

PeckShield detected robust $Web3Memes. (Address) deposited 625 BNB on TornadoCash. Stay away from tokens deployed by funds withdrawn from TornadoCash.

1,800 transactions in a few hours

W3M was created early today and listed on BSC-based PancakeSwap soon after. Over the next few hours, W3M recorded over 1,800 transactions. More than 1,000 people held the play.

Five hours after it was issued, its anonymous developers pulled its trading liquidity in a classic all-in draw.

What is a rug draw?

Developers are doing social media marketing, launching a working app, or doing other seemingly legitimate work on a blockchain. Then they issue a token and list it on a decentralized exchange (DEX). Tokens like Web3Memes can be issued by anyone on Binance Smart Chain, Ethereum Mainnet, and other networks.

The scam starts with the ad

Investors buy the token, hoping its price will rise, giving the project liquidity. Liquidity is provided in ERC20 tokens if the project runs on Ethereum mainnet, Binance Coin for BSC, SPL for Solana, etc. More interestingly, it can reach millions of dollars.

After the project has been live for a while, the pool can accumulate up to hundreds of millions. Then the scammer strikes, taking the liquidity from the DEX and taking all the money.

When this happens, the price of the token will drop. For example, W3M’s price almost fell to zero after the pull.

$2.8 billion was lost to rug draws last year

Chainalysis reported that investors lost more than $2.8 billion to rug draws in 2021. last year. As expected, the increase in scams reflected an overall increase in cryptocurrency prices.

The biggest rug prints in history

The biggest draw in history was that of Turkish crypto exchange Thodex, the only centralized exchange to have suffered this type of attack. The exchange lost more than $2 billion in investor funds in April last year.

The second biggest was AnubisDAO, inspired by Dogecoin, which lost $58 million. Rounding out the top three is BSC-based Uranium Finance, whose users parted with $50 million.

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