Listen to The Money Chant of the Wolves of Crypto.
You remember The Money Chant: Matthew McConaughey thumping his chest, talking fools and money before—sniff!—a little lunchtime “tootski.”
Titan Maxamus has been there. Well, not there, in a Wolf of Wall Street-style boiler room. There on the other side—as the mark. Titan Maxamus knows the game. All the brazenly cynical players do. In Scorsese’s cinematic bender of sex, drugs and stocks, it’s called the pump and dump. In today’s cryptocurrencies, it’s known as the rug pull.
Maxamus thinks he got rug-pulled the other month in some sketchy digital token called—wait for it—Safe Heaven. Like countless dreamers in today’s memeified markets, he’s been gambling $50 here, $100 there on what are known as Shit Coins, obscure digital something-or-others being minted by the thousands. This stuff makes Bitcoin look good as gold.
One moment, Safe Heaven was flying. The next, it was crashing. Maxamus (that's his online persona. His real name is Glenn Titus), can’t prove anything. But he suspects what, in retrospect, seems forehead-slappingly obvious: some small-time hustler created Safe Heaven with a few deft keystrokes, hyped the hell out of it—and promptly cashed out. Telegram, a popular instant messaging app that’s become a major crypto boiler room, immediately fell silent. The Safe Heaven Telegram group, once thronging with rocket emojis and Elon Musk GIFs, was deleted. The Safe Heaven Twitter account hasn’t been updated since May 28.
“Everybody I know has gotten rug-pulled,” says Titus, a 38-year-old butcher in Salem, Oregon. “You know, you win some, you lose some. Hopefully, win more than lose.”
It might sound like a joke, given the crypto meltdowns of late, but serious money is at stake here. Billions—real billions—are getting pilfered annually through a variety of cryptocurrency scams. The way things are going, this will only get worse.
Back in the Wall Street Dark Ages—six, 12, 18 months ago—these sorts of shenanigans were mostly associated with shlocky brokerages like the one depicted in the 2013 Wolf. In those halcyon days before GameStop, Dogecoin and the rest, schlubs on Long Island might pitch ridiculous over-the-counter stocks to the gullible.
Nowadays crypto hustlers and star-gazers like Titan Maxamus have established a weird symbiotic relationship. It seems to capture everything that’s gone wrong with money culture, from Reddit-fueled thrill-seeking to conspiracy theorizing to predatory wheeling-dealing. The rug pull is only one play. There’s also the gentler soft rug, the crypto version of getting ghosted on Hinge. And the honey pot, which functions like a trap. Old-fashioned Ponzi schemes, newly cryptodenominated, have swindled people out of billions too.
At times the result can start to resemble the Agatha Christie mystery classic “Murder on the Orient Express”: The who in this dunnit is somehow everyone. Grifters will grift. But like Maxamus, many marks actually expect to get snookered once in a while. Both sides, the swindler and the swindled, are in on this one. Elaborate social-media systems have sprung up to flag potential trouble, not only to avoid it but maybe even to profit from it.
Many who feel they’ve been ripped off just shrug. They chalk it up to the cost of doing crypto, the price of buying a lottery ticket that maybe just might hit that big jackpot.
Titan Maxamus says he’s still in the money, swindlers be damned. And he’s not giving up. He’s got anywhere from $20 to $1,000 in dozens of different meme coins. (A recent pick, Blue Lighting, looks like it fell victim to a honey pot—more on that later).
“People have a fear of missing out on the next big thing, so they’re just dumping money here and there,” Maxamus said with earnest understatement, just before Bitcoin and Shit Coins began to crater recently. He concedes his own FOMO lured him into a rug-pull or three. “I guess you never know,” he reflects. “That’s part of the risk you take.”
The list on Tokensniffer.com runs on and on. Six minutes ago, CatRocket. One hour ago, MoonMiner. Three hours ago, GoldenShiba. Four hours ago, EverRise. So it goes, hour after day after week after month, in a sort of running Trip Advisor review of bad crypto experiences. They all appear under the same heading: “Latest Scams & Hacks.” Tokensniffer, aptly named for Shit Coins, claims to have tracked 42,071 tokens and 2,250 scams or hacks. That was as of June 16. More than 200 supposed stings were logged by users during the first two weeks of June alone.
Just how many of these coins have actually been rug-pulled, soft-rugged or otherwise manipulated is anyone’s guess. The website was developed in October 2020 by a software-engineer-cum-crypto-trader. He is 44 years old and lives in the western United States. Like many players in crypto, he prefers to remain anonymous.
The idea for Tokensniffer came to him after he fell victim to rug pulls himself. His website scrapes data about new meme tokens from popular social media channels and scans the source code. Sometimes users also flag tokens that aren’t in the system. Tokensniffer functions a bit like a virus scanner looking for malicious code patterns. A “smell test” program searches for vulnerabilities. Clones of existing meme tokens are often a red flag. Most recent scams—the site flagged 450 in in one recent 30-day period—were honeypots. Those tend to be easier to spot because of their code, Tokensniffer’s creator says. Rug pulls are more complicated.
Smaller Scams
Such supposed safeguards aside, people are getting scammed in growing numbers. So far this year, over $2.6 billion has been grabbed, according to Chainanalysis, a New York-based blockchain researcher. That figure doesn’t include a giant Ponzi scheme that just came to light in South Africa. Local authorities put the haul at $3.6 billion worth of Bitcoin. Gob-smacking as all of this might sound, these numbers in fact represent a marked decline from 2019, when fraudsters walked away with an estimated $9 billion.
But here’s a key difference: the sheer number of people getting hoodwinked. With a few outsize exceptions, most crypto scams seem to be getting smaller. That’s the good news. The bad news is that there are more of them, and more people are getting stung. From 2019 to 2020, the number of victims has jumped 48% to an estimated 7.3 million, a figure approaching the official population of Hong Kong. Between the last three months of 2020 and the first three months of 2021, the number of unique scams rose nearly 18%, to 1,335, according to Chainalysis.