Memecoin Frenzy Hits Coinbase-backed Base with Increased Risks of Rug Pulls
Some memecoin traders were lucky to make huge returns from a small investment while others were rug pulled with a promise of future return.
The memecoin industry has been used by most crypto traders to fetch higher gains in a bid to accumulate Bitcoins, which is not only expensive to mine but also acquire. Moreover, the memecoin industry is composed of altcoins with higher volatility compared to Bitcoin which has been registering diminished returns. Over the weekend, some cryptocurrency traders had a chance to make decent profits while others were affected by scams.
Top Memecoins that Made Headlines over the Weekend
Over the weekend, some crypto traders swapped their Ether tokens for questionable memecoins on Coinbase Global Inc (NASDAQ: COIN)-backed layer two scaling solution dubbed Base. Among the crypto tokens that recorded heightened traded volume over the weekend on Base include Brian Armstrong-themed memecoin dubbed BALD, which experienced a 289,000 percent gain within its first few hours of launch.
According to an on-chain analysis provided by Lookonchain, four Ethereum-based addresses swapped approximately $1k worth of Ether to purchase about 5 percent of the circulating supply of BALD tokens. Interestingly, the said addresses cashed out approximately $1.04 million of Ether a day after trading launched. Notably, the four addresses withdrew 0.5 $ETH from the Bybit crypto exchange at the same time, cross-chained the assets to the Base network, and purchased $BALD within 4 mins of $BALD starting trading, thus suggesting it was the same person involved in the trades.
These 4 addresses spent 0.534 $ETH($1K) to buy 50M $BALD (50% of the total supply) within 4 mins of $BALD starting trading.
Then sold 37M $BALD for 554 $ETH($1.04M).
Earned $1M with $1K in 1 day! pic.twitter.com/gXIDRjbhic
— Lookonchain (@lookonchain) July 30, 2023
According to market data provided by Coingecko, BALD traded around $0.081828 on Monday, up approximately 61 percent in the past 24 hours. Although the exact BALD circulating supply was not determined at reporting time, its 24-hour trading volume was about $87 million. Nonetheless, cryptocurrency traders are warned to take extra caution as the BALD project did not have an official website or audited infrastructure and tokenomics.
Another memecoin that made headlines, according to analytics provided by Dexscreener is BASED, which had surged over 1,000,000 percent in the past 24 hours.
Rug Pull Fears
However, these meme coins had very thin liquidity, which ultimately trapped crypto traders trying to enter their market. As a result, cryptocurrency traders are exposed to the risks of rug pulls without proper protection.
OMG some presale on Base just rugged and dev sent a whole ass apology letter pic.twitter.com/rcmMcP7F7i
— punished echo (@OHEXE_ECHO) July 30, 2023
For instance, a developer made away with users’ funds with a promise to return them after profit gains. Notably, the developer promised to return funds after profits from the investment hit more than five times, which is basically gambling the money. As a result, cryptocurrency traders have been warned to keep away from risky meme coins as the gain have already been registered.
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