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BALD Coin Rug Pull: How A $100 Million Memecoin Became Worthless Overnight

On July 30, a meme coin called BaldBaseBald (BALD) launched on Base Network, Coinbase’s new Layer 2 built on Optimism. The coin referenced Brian Armstrong, Coinbase’s “bald” founder, and quickly became a coordination point for speculators on the frontier chain. 

Within two days, the token had reached a market cap of $100 million, with over $25 million in liquidity. However, the token’s meteoric rise turned out to be a classic case of market manipulation, as the deployer behind the token, BaldBaseBald, rug pulled the token and caused its price to plummet by 85%.

Malicious Market Behavior Behind BALD?

Market researcher Thiccy indexed all the transactions from the Bald deployer and uncovered a story of malicious market behavior. BaldBaseBald added over 6,700 ETH, or over $12.5 million worth of liquidity, to the pool in the first 24 hours, a surprising amount of capital for a meme coin on a new chain. 

The deployer’s actions were undoubtedly bullish for speculators, and many people speculated that Brian Armstrong had created the coin to drum up hype. However, as soon as the deployer stopped adding liquidity to the pool, the price stagnated and broke down. 

BALD

24 hours later, the deployer started bidding on BALD again, causing the price to double. Then, the deployer withdrew over 10.500 Ethereum (ETH), or almost $20 million worth of liquidity, leading to an 85% drop in the token’s value.

Thiccy’s analysis showed that the deployer had made a net profit of 2,789 ETH, or 5.2 million dollars, after adding 6,870 ETH, spending 1,360 ETH buying at an average price of 0.0004, and withdrawing 10,704 ETH. 

It was surprising how well-capitalized the actor was and how bold they were in carrying out this apparent manipulative market behavior in the middle of the public light on Coinbase’s compliance chain. Thiccy Concluded:

And with that, the story of BALD has come to a close play stupid games, win stupid prizes. Hopefully we can learn from this as a space this market is rife with market manipulation and unethical shills. Be careful who you trust.

Thiccy advises investors to control their Fear of Missing Out (FOMO) and not risk more than they can afford to lose, as survival is too important in this game. 

As for BaldBaseBald has removed the rest of the liquidity, bringing their total Profit and Loss (PnL) to 3,163 ETH, or $5.9 million. 

BALD

Featured image from iStock, chart from TradingView.com 

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DeFi Protocol Sparks Speculation Of $16 Million Rug Pull After Severing Lines of Communication

DeFi protocol, Hector Network, has closed its official Discord server, leaving many investors in the dark. The move comes amidst growing suspicions of a $16 million rug pull engineered through a so-called hard rug, a process where funds are quickly moved, leaving investors with shitcoins. This comes after a controversial rage-quit vote organized by the project’s DAO. 

DeFi Protocol Hector Network Leaves Investors In Limbo

Hector Network investors woke up to the news that the DeFi protocol had cut off communications on its official Discord server. The Discord server was the only means of communication between the network’s team and its investors which was established after the Hector Network team censored them from the official server in April. 

The server was meant to run parallel to the official Discord, preserving data from the latter. Since then, it has become the only means of communication among DAO members.

The move has left the network’s investors in a state of shock since they no longer have any means of communication with the network’s team. This has led to a lot of backlash, and according to Libagscientist, an investor and vocal critic of the platform, “there is no backchannel open anymore.” 

In the absence of any official communication, dejected investors are accusing the network of siphoning the $16 million left in its treasury. 

According to investors, the team embezzled the project’s funds over an 18-month period starting in 2021. According to records of DAO votes, the Hector team received over $51 million in salaries during this period without delivering on any meaningful milestone. An aggrieved investor identified as Jintu said, “..not one thing has actually moved forwards.”

A Story of Sheer Incompetence and Greed

The Hector Network is part of several Olympus DAO forks, a prominent cryptocurrency reserve currency project that peaked during the DeFi summer of 2021. The Hector Network, like other Olympus DAO forks, promised huge annualized yields of about 100,000% in the beginning, and the early successes of Olympus DAO attracted many investors hunting for massive returns. 

During its hay days, Hector Network’s native token, HEC reached $357 in late 2021. However, the platform’s challenge lies in the fact that its inflationary yield needs to be supported with a steady influx of investor cash to keep the HEC token valuable and maintain its high yields. 

Following the crypto winter that began in November 2021, the platform has been unable to recover. Aggrieved investors believe that the team should have applied the funds held in its treasury toward developing value for token holders. 

Many have now accused the team of being greedy and unconcerned about meeting the targets of the network and the current saga might eventually end up in the courts. However, investors’ top priority remains to recoup their funds. Hector Network has declined requests for comments but has unequivocally rejected the allegations in a statement released on June 14.

Hector Network (HEC) token price chart from Tradingview.com (DeFi)

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The Ethereum Foundation Sold At The Top Again. Did They Know Something We Didn’t?

Apparently, the Ethereum Foundation employs incredible traders. Once again, they managed to cash out at the very top. On November 16th, ETH was worth an all-time high of $4891. On the very next day, the Ethereum Foundation sent 20,000 ETH to Kraken and sold them. Is this suspicious at all? Not per se, but this is the second time that they pull the same magic move. 

Related Reading | Why The Ethereum Foundation Launched A Client Incentive Program

A professional trader that goes by the name Edward Morra on Twitter was the first to spot the trade. “Friendly reminder that ETH foundation cashed out at the top (again). ETH down 40+% since then,” he said. Morra also provided a chart that shows ETH’s sharp decline in price since the sale.

$ETHFriendly reminder that ETH foundation cashed out at the top (again). ETH down 40+% since then pic.twitter.com/Bp80hEDvK0

— Edward Morra (@edwardmorra_btc) January 21, 2022

To add insult to injury, the Ethereum Foundation only paid $20 in gas fees. That might be the most impressive feat of them all.

At the time of writing, the Ethereum Foundation’s wallet holds 353,318 ETH, which is approximately $835K at current prices.

What Do We Know About The Organization’s Previous Sell-Off?

Back to Morra, his Twitter followers told him that this information was of no use to them this late in the game. The trader surprised the world and pulled an ace up his sleeve. As it turns out, Morra tweeted about the trade at the time it happened. Not only that, he warned them, “They cashed out 35k ETH on 17th of May this year, marked on the chart.”

Casual 20k ETH cashout by EthDev, sent to Kraken:https://t.co/w6AbdeW2AJThey cashed out 35k ETH on 17th of May this year, marked on the chart 👇 pic.twitter.com/sTbUwHSzD4

— Edward Morra (@edwardmorra_btc) November 11, 2021

As you can see on the chart, on May 17th the price of ETH was near its previous peak. And after the Ethereum Foundation sold, ETH trended down for months and months. Is this a coincidence? Does the foundation employ great traders? Or, is there something else to this story? Did they dump on retail ETH holders? Did the Ethereum Foundation know anything that the rest of the world didn’t?

The Ethereum Foundation still holds 394,787 ETH, and Vitalik said he persuaded foundation to sell 70,000 ETH at the top of 2018 to support the work of developers. This is a normal operation, but it also means that the Foundation thought that bear market is coming.

— Wu Blockchain (@WuBlockchain) May 21, 2021

At the time of the first sell-off, journalist Colin Wu highlighted the trade and said, “The Ethereum Foundation transferred 35,000 Eth to the Kraken Exchange on May 17. Vitalik said bubbles could have ended already on May 20.” Analyzing the move, Wu said, “This is a normal operation, but it also means that the Foundation thought that bear market is coming.”

The gas fee for this operation was 0.00240474 ETH, or $5.66 at the time of writing. Wow.

ETH price chart for 01/25/2022 on Bitfinex | Source: BTC/USD on TradingView.com
What’s The Ethereum Foundation Anyway?

According to Ethereum’s official site:

“The EF is not a company, or even a traditional non-profit. Their role is not to control or lead Ethereum, nor they are the only organization that funds critical development of Ethereum-related technologies. The EF is one part of a much larger ecosystem.”

The Ethereum Foundation distributes funds to developers via the Ecosystem Support Program and the Fellowship Program, organizes Devcom, and more. To do all that, they surely need Fiat currency in some capacity. The trade makes sense from that angle.

Related Reading | Ethereum Foundation Devs Discuss ETH2 Launch & Economics

The question, though, is, did they know that a crash was coming? And if they did, did they reach that conclusion through technical and on-chain analysis or by… other methods?

Featured Image by PatriestB on Pixabay | Charts by TradingView