‘Web3Memes’ Rugs $235K From Investors Five Hours After Issuance: PeckShield

Developers behind Web3Memes (W3M), a Binance Smart Chain (BSC)-based meme coin, drained the token's liquidity pools of nearly 625 Binance coins (BNB)

Investors in Web3Memes (W3M), a Binance Smart Chain (BSC)-based meme coin, lost nearly $235,000 after its developers drained the token’s liquidity pools and disappeared five hours after its issuance, blockchain security firm PeckShield said on Wednesday.

The token was created during early Asian hours and was listed on BSC-based PancakeSwap shortly afterward. W3M saw over 1,800 transactions in the following hours and over 1,000 holders at the time of writing.

However, the anonymous developers pulled the rug on W3M some five hours after its issuance – causing the token to crash by nearly 100%.

Prices of W3M dumped from highs of $0.000000204 to under $0.00000000277 after the rugpull.

According to PeckShield, 0x5adbffa751abcdfc94d2a81f5657113d37a3494f, an address linked to Web3Memes, deposited 625 Binance coins (BNB) into the Tornado Cash protocol, an anonymity-centered decentralized application.

The blockchain security firm earlier reported the exploit in a tweet.

#rugpulls PeckShield has detected $Web3Memes https://t.co/IOHWEjhmVC rugged. 0x5adbffa751abcdfc94d2a81f5657113d37a3494f has deposited 625 BNB to @TornadoCash. Stay *AWAY* from tokens that are deployed by funds withdrawn from @TornadoCash. pic.twitter.com/bsWpHALz0b

— PeckShieldAlert (@PeckShieldAlert) February 23, 2022

“Stay AWAY from tokens that are deployed by funds withdrawn from Tornado Cash,” the firm added in the tweet.

Tokens like Web3Memes can be issued by anyone on BSC or other networks. Issuers can then pair such tokens with another popular token, such as tether (USDT) or BNB, and list the pair on a decentralized exchange by providing initial liquidity. The process is wholly automatic and relies on smart contracts instead of third parties or centralized entities.

In 2021, over $2.8 billion in investors' funds were lost to rugpulls, as reported by blockchain analysis firm Chainalysis. The figure accounted for 37% of all scam revenue during the year compared to just 1% in 2020.