Rug Pulled: Popular Crypto ICP Suffers Nasty 95% Drop On Bubbleheads

Rug Pulled: Popular Crypto ICP Suffers Nasty 95% Drop On Bubbleheads

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Bubble in the finance world. Credit:Petrovich9 / iStock, https://www.istockphoto.com/portfolio/Petrovich9?mediatype=photography

Popular Internet Computer token ICP, created by a company that says it’s on a mission to build an extension of the internet on the blockchain and reverse big tech monopolization, has lost about 95 percent of its value since it went live at around $630 on May 10, prompting accusations that it was a scam and was rug pulled.

Dfinity, the company developing the Internet Computer idea, sold 90 million tokens in recent weeks. “For some, this is a sign of the Internet Computer turning into another scam project, even though it doesn’t necessarily have to be. All new altcoins lose massive value after their first few days, and ICP is no different,” Cryptomode reported.

ICP was trading at $28.71 on June 26 and at $49.72 as of this writing.

“Always beware of the Silicon Valley guys offering a revolutionary new crypto product that’s in production,” said Edwin Smith, a private crypto investor and early adopter in the crypto space, in a text to The Moguldom Nation.

“It’s an exit scam rug pull. The End.” bitcoin evangelist Max Keiser tweeted @maxkeiser. Keiser has also called ethereum and cardano “exit scams.”

The ICP token supports technology based on a public blockchain that uses an open-source protocol. Built by Dfinity, Internet Computer is designed to help operate a decentralized layer of web infrastructure that believers say will liberate users from reliance on companies like Amazon and Google, New York Times reported. The network would make it easier for people to build software and publish directly to the internet without going through the tech giants’ platforms.

Dfinity was founded in 2016 by Dominic Williams and it describes its mission with words that suggest magical thinking — to host “secure software with superpowers.” Dfinity claims the Internet Computer technology is tamper-proof, fast, scales to billions of users around the world, and supports a new kind of autonomous software that promises to reverse big tech’s monopolization of the internet.

“As great as the tech is on paper, it is, to a large extent, unproven,” said Denis Vinokourov, head of research at Synergia Capital, in a CoinDesk report. “Also, there is little evidence of teams actively building on ‘The Internet Computer.’”

CoinMarketCap defines a rug pull as a malicious maneuver in the crypto industry where crypto developers abandon a project and take off with investors’ funds, usually in the decentralized finance (DeFi) ecosystem and especially on decentralized exchanges.

ICP may or may not be a scam and a rug pull, but Silicon Valley venture capital helped fund the technology its creators claim to be building. The project raised more than $120 million, with investors including Andreessen Horowitz (a16z), Polychain Capital, Scalar Capital, CoinFund, Multicoin Capital and Greycroft Partners. Andreessen Horowitz and Polychain, a crypto hedge fund, invested $61 million in 2018 in Dfinity Foundation — the firm that said it intended to connect multiple computers together using blockchain to build an “internet” computer.

The U.S.-based crypto exchange Coinbase, which listed ICP, was an ICP investor, prompting a view that the token went to the front of the listing line — a potential conflict of interest. Several other exchanges listed ICP including Binance, Huobi and OKEx.

“ICP isn’t really a crypto,” Smith told Moguldom. It’s “more like Ripple Labs. Some Silicon Valley VC product promising the moon with no real product yet insiders got rich and exit-dumped late into a hype cycle.”

Ripple Labs supports tokens representing fiat currency, commodities and other units of value such as frequent flier miles or mobile minutes using the token XRP. The U.S. Securities and Exchange Commission sued Ripple in December 2020 for selling XRP tokens, which it classifies as unregistered securities, and raising more than $1.3 billion. Ripple’s co-founder and CEO are accused of personally profiting by about $600 million.

“Silicon Valley sees crypto as a way to hype up junk and cash out through ICO, an infinitely cheaper and less regulated form of IPO,” private crypto investor Smith told Moguldom. “Coinbase doesn’t usually list shit like a ICP, but they did because they were early investors. But the market almost immediately rejected it. No crypto natives I know fell for that.”

The fact that the ICP was launched during such a boisterous market likely pushed initial valuation into the upper range of expectations, Vinokourov said.

“With prices retreating across the industry, the most recently hyped projects have been among those hardest hit,” said Rick Delaney, senior analyst at OKEx Insights, on Coindesk. “In ICP’s case, it seems the harder and faster it pumps, the more severe the dump.”

Despite ICP’s huge price plunge, the technology still has fans. “A short story. But the tech is still cool” James Spediacci tweeted.

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?

“Alot out people lost 80% from the 2017 btc top and if they held for a few years recovered. It’s possible the same can happen with this coin,” Felix G wteeted @flexgorr.

Others on Twitter reminded each other of what’s at stake with speculative investments.

“I am sad to see people lose so much money,” @mplsv11 tweeted.

“Instead of gold, silver or palladium, people are ‘investing’ such shits. It’s not investing at all. It’s feeding the sharks with your own flesh,” @mplsv11 responded.

Keiser, who promotes digital assets through his Keiser Report RT show, tweeted that to pull off what he sees as a rug-pull of this scale requires Goldman Sachs-like talent. “Anybody can cut and paste a shitcoin and do a rug pull but to f*** people up this big requires an ex-Goldman Sachs talent like.”


Image: Petrovich9 / iStock