A 22-year-old developer, responsible for the controversial cryptocurrency venture Encryption A.l, has been reported to have rug-pulled customers, taking approximately $2 million just before the planned migration of the platform’s liquidity. In a screenshot shared on July 3 and posted on Twitter, the developer expressed remorse, stating that he “deeply regretted his actions and the impact on users,” while revealing he was grappling with a severe crypto-gambling addiction that led him to lose over $300,000 in recent months.
It appears that the decision to execute a rug pull, effectively stealing personal funds, was a desperate attempt to recover his significant losses from crypto gambling. This situation highlights the darker side of the cryptocurrency market, where developers can take extreme measures in times of financial distress.
Significant Decline in OxEncrypt Prices Following Rug Pull Incident
According to data from DEXTools, the price of OxEncrypt plummeted by over 95% in the aftermath of this scandal, dropping sharply from over $3.25 to a staggering low of $0.02 by the time the screenshot was shared online. The token was exclusively available for trading on Uniswap, recognized as the largest decentralized cryptocurrency exchange globally. This rapid decline in value illustrates the volatile nature of cryptocurrency and the impact of developer actions on token prices.
OxEncrypt served as the native token for Encryption A.l, a cryptocurrency project that purported to be developing an “arsenal of tools” aimed at empowering both traders and developers in the market. The promise of innovative solutions drew in investors and users, but the rug pull has left many questioning the integrity of such ventures.
Among the features initially touted by the platform was the capability to create Telegram bots, which the developer claimed would facilitate more efficient trading of decentralized finance (DeFi) instruments. However, the unfortunate turn of events raises concerns over the actual utility and reliability of these tools, as many users are now left without recourse.
Furthermore, the team promoted various tools, including a Wallet Analysis Tool designed to provide detailed reports on a wallet’s balance, alongside a Fresh Wallet Detective tool aimed at identifying the first 100 contract buyers. These features were meant to enhance user experience, but in light of the recent events, they now seem overshadowed by the developer’s actions.
User Funds Misappropriated by Encryption A.I Before Planned Migration
On Twitter, the platform indicated that a migration was scheduled for July 3; however, they later announced an extension of an additional 48 hours for users to migrate their assets via DEXTools. The migration was intended to improve the platform’s functionality and address concerns raised by community members, but instead, it became a cover for the developer’s nefarious actions.
Considering the timing of the rug pull, it seems the developer exploited the increased number of tokens locked in the liquidity pools on Uniswap to execute his plan and abscond with user funds. Typically, such a blatant rug pull suggests that the project has been effectively abandoned unless revitalized by a community that still sees potential value in the platform.
On the flip side, investors who had placed their trust and resources into the project now find themselves holding virtually worthless OxEncrypt tokens. Moreover, unless the developer faces legal repercussions, the victims of this incident may find themselves without any means of recovery. This unfortunate reality stems from the trustless and immutable characteristics of Ethereum smart contracts, which facilitate token locking and trading on Uniswap.
Feature image from Canva, chart from TradingView
