Blockchain security firm accuses token of crypto rug pull resulting in $1.3 million in losses

May 6, 2022, 4:13 PM UTC

While Thursday saw more volatility than usual in the cryptocurrency sector, the losses experienced by most Bitcoin and Ethereum investors were nothing compared to those seen by people who owned the Day of Defeat token.

The altcoin saw its value drop 94.68% on Thursday, according to CertiK, a blockchain security firm and auditor. That resulted in an estimated $1.35 million in losses, though official numbers haven’t been released yet.

Official admins from Day of Defeat have denied the plunge was a rug pull, saying their wallets were attacked by a hacker.

CertiK, however, alleges “the two wallet addresses both contain large amounts of DOD tokens they received or swapped from contract-related addresses.”

Fortune was not able to reach Day of Defeat for comment.

Rug pulls are a crypto scam in which a developer promotes a new project—usually a new token—to investors, and then disappears with millions of dollars. It accounted for $2.8 billion in lost money for victims in 2021, according to blockchain analysis company Chainalysis. That’s 37% of all cryptocurrency scam revenue. And they can impact anyone. Last year, even billionaire investor Mark Cuban said he’d been fooled.

While the DOD tokens crashed, an admin going by the name “Jerry” tried to calm users, posting in the Day of Defeat Telegram chatroom.

“As you already know and have seen, there was a major sell off by the marketing wallet and transitional wallet. THIS WAS NOT US, WE DID NOT PULL LIQUIDITY. At this point it seems the wallets were compromised. We are investigating this attack and will produce a follow up as soon as we have all facts. Please note this just happened and we are in the middle of working on this,” the admin wrote.

Later, that same admin encouraged people to invest again, saying the contract had moved to fresh wallets, writing: “This is your chance to get in early again.”

“This was a textbook rug pull, and it’s sad to see users duped by such a bad faith project,” says CertiK. “In retrospect, Day of Defeat had many markers of a rug pull as it had no third-party audit, and no transparency around the project team.”

The DOD crypto raised many eyebrows when it first appeared, with founders claiming it was “mathematically designed to give holders 10,000,000X PRICE INCREASE.”

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