A recent report reveals that 98.6% of tokens on Pump.fun are fraudulent, with the platform seeing over seven million tokens launched since January 2024. Only 97,000 maintained any liquidity, and issues of rug pulls are present on decentralized exchanges as well. The Solana blockchain is increasingly favoured by criminals due to its low fees and swift transactions, with regulators now taking action against these scams.
A new report by Solidus Labs has raised alarm bells about the rampant fraudulent activities on the crypto token creation platform, Pump.fun. According to their findings, a staggering 98.6% of the tokens launched since the platform began in January 2024 have been either rug pulls or part of pump-and-dump schemes. Notably, out of over seven million tokens, only a meagre 97,000 have successfully maintained at least $1,000 in liquidity.
Pump.fun allows users to create new crypto tokens on the Solana blockchain for an impressively low cost, but this has unfortunately made it a hotbed for scams. Solidus labs highlighted that the largest known rug pull from this platform reached an eye-watering $1.9 million linked to a token called MToken. This grim statistic adds to the shadow hanging over the cryptocurrency market that continues to suffer from hacks and scams, with some malicious actors making off with millions by exploiting retail investors’ greed.
The memecoin sector has particularly been problematic, with thousands of dubious tokens cropping up daily. A notable spike in the hype around these tokens occurred when former U.S. President Donald Trump promoted his TRUMP memecoin, shortly followed by First Lady Melania Trump endorsing her own, MELANIA. Now, those tokens are down significantly, with losses of 87% and 97%, respectively; moreover, reports suggest that insiders profited over $100 million by acquiring these tokens before they became publicly accessible.
The report from Solidus Labs didn’t stop there. On the decentralized exchange Raydium, 93% of liquidity pools—totaling around 361,000—displayed signs of soft rug pulls, with the average pull being valued at approximately $2.8K. This comes on the heels of another study by Merkle Science, indicating that about $500 million had been lost to scams and rug pulls just in this year.
The Solana blockchain has increasingly become the choice for many criminals and scammers, primarily due to its negligible fees and swift transaction capabilities. Regulatory bodies are certainly aware of these developments; in March, the SEC established a specialised unit meant to combat those seeking to misuse technology for fraudulent purposes. They have already taken action, filing a class-action lawsuit against a group linked to the M3M3 meme coin, alleging their involvement in a $69 million rug pull.
Oliver Knight, who leads the CoinDesk data tokens team, has been in the crypto scene since 2013 and has a background that includes time at a UK market-making firm. Since joining CoinDesk in 2022, he has focused on bringing clarity to the murky waters of cryptocurrency standards and practices. It’s notable, too, that Knight does not have any current crypto holdings, reflecting a cautious approach in light of the ongoing volatility and scams.
