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Blast’s First Scam? RiskOnBlast Suffers “Rug Pull”, But What Does it Mean for Investors?

Published February 26, 2024 10:50 AM
Teuta Franjkovic
Published February 26, 2024 10:50 AM

Key Takeaways

  • Rug pull on Blast’s Layer 2 “RiskOnBlast” project vanished with $1.3 million worth of crypto.
  • The incident affected more than 750 wallets, with stolen funds traced to exchanges.
  • Blast itself not responsible, incident highlights investor frenzy and lack of due diligence.

The Blast ecosystem , a Layer 2 scaling solution for Ethereum (ETH), experienced its inaugural rug pull incident recently.

An unidentified entity, RiskOnBlast, which presented itself as a gambling and exchange platform, collected 420 ETH, worth approximately $1.3 million, from backers in a recent seed funding round and then vanished . Furthermore, it took part in Blast’s Big Bang competition, which offered the prospect of additional financial support for the platform.

Project Vanishes, Leaving Trail of Misappropriated Funds 

On Sunday, February 25, the project abruptly deleted  all its social media accounts, with the apparent theft impacting over 750 wallets.

Significant amounts of the misappropriated funds were traced to various cryptocurrency services. Approximately $500,000 went onto the swapping service ChangeNow and $360,000 went to the MEXC exchange. Meanwhile, onchain researcher Somaxbt  said that $187,000 went to another exchange, Bybit.

Blast had earlier disseminated details regarding the project through its official X account , showing enthusiasm for its promise. Although Blast does not govern the operations of projects on its blockchain, investors could see its public support as a mark of credibility.

Investor Losses and Lack of Scrutiny Highlight Market Frenzy

An investor’s report of a loss exceeding $12,500 drew criticism from market watchers over a lack of due diligence. The excitement surrounding the project was, potentially, indicative of a bull market atmosphere. This matter is characterized by inflated valuations and a tendency to invest capital without comprehensive evaluation.

PeckShield’s monitoring  reveals that the majority of funds pilfered from the Rug Blast’s ecological game Risk were redirected to exchanges. These include ChangeNow, Bybit, MEXC, and SideShift. Additionally, a minor portion of the stolen assets has moved transferred across chains to Arbitrum and Cosmos.

Pioneering Ethereum L2 Solution with Promising Backing 

Blast, a Ethereum Layer 2 scaling solution, was designed to enhance yield opportunities for both ETH and stablecoins through ETH staking and Real World Asset (RWA) protocols.

Founded by the people minds behind the BLUR NFT marketplace, Blast secured support  from prominent investors such as Paradigm and Standard Crypto. The platform raised $20 million soon after its debut last year. The official launch of the Blast mainnet is due this month, with a points redemption feature following in May.

In a recent developer competition, Blast marked  47 projects as winners from an extensive pool of 3,000 submissions. These selected teams could receive funding in the near future. This move could help the platform’s ecosystem grow.

As Blast progresses and expands, its recent problems underscore the critical need for vigilance in its journey of innovation and development.

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