In July 2023, the creator of Encryption AI 0XENCRYPT performed a rug pull. Citing a gambling addiction, the Encryption AI owner drained an estimated $2 million from the project.
Inside the Rug Pull
Encryption AI is an example of a project claiming to use AI to gain visibility and investment. In this case, the creator claimed to make launching tokens easier by using automated bots to collect useful information for users about token launches.
In July 2023, the developer behind Encryption AI posted a message to the community during a migration citing a gambling addiction as a reason for the rug pull. They then drained an estimated $2 million from the protocol to recover money to pay off those debts.
Lessons Learned from the Attack
The Encryption AI rug pull is one in a series of high-value rug pulls. DeFi projects are relatively easy to create and build up to high values, making them tempting for unscrupulous developers.
Even these rug pulls that are supposedly on the spur of the moment often have warning signs.
To learn more about how to protect yourself against rug pulls, check out our blog on the 7 Warning Signs of a Crypto Exit Scam.