Frosties NFT Team Vanishes in $1.3 Million Rug Pull
The Intelligent Insurer #49 - First rug pull of 2022 leave investors in a hole
The creators of Frosties NFT have vanished with invested funds marking the first rug pull of 2022 in the blockchain space. After raising $1.3 million from purchases on OpenSea, the Frosties NFT team has gone underground. Their Twitter and Discord accounts have shut down while all other communication channels with the community closed.
In the latest Intelligent Insurer, we highlight the details of the rug pull and reaction of investors who are now making an effort to recover their funds. We also suggest alternative digital asset protection solutions that investors will find useful. But first, we’ll present the progress we’ve made this week via our software development update.
Insured Finance software development update
We continued making progress this week by making improvements to our next-generation digital asset insurance platform. Users can now experience a safer and more intuitive experience. Here are the highlights of the progress we made this past week:
We improved our landing page functionality by addressing concerns around Token Requests. The “Add Etherscan” and “Add Token” action buttons are now fully functional.
In preparation for the year ahead, we continue to flesh out points in our roadmap. We’re currently discussing and revalidating relevant points in our roadmap to ensure user experience and goals are met.
We’re looking for your feedback! User research is a central pillar of everything we do at Insured Finance. As a part of this, we’re seeking feedback from our community and seeking people willing to participate in interviews. The feedback we receive from these interviews will be directly incorporated in our platform. We recently carried out our first interview and received exemplary feedback from a user based in Scotland. The user noted that the P2P system is “excellent and powerful” and that Insured Finance offers him an effective way to protect his digital assets. We will be lining up more interviews with community members. Get in touch with us today to schedule an interview!
In addition to the above, we continue to prioritize user safety on our platform. Our digital asset insurance platform is set to create a significant impact on the DeFi industry and we cannot wait to further enhance user experience.
Frosties promised investors much before rug pull
The Frosties NFT project began promisingly. The development team originally promised investors benefits like token staking, Metaverse breeding functions, and early-access to a highly original Metaverse game. The project team even presented a detailed roadmap on their website before launching.
The initial drop included 8,888 NFTs, all of which sold out on the OpenSea NFT marketplace on January 9th, 2021. The average price of each NFT was 0.04 ETH, equivalent to about $121 at the time of purchase. Within 43 minutes of the drop, all 8,888 NFTs sold out.
Shortly thereafter, the Frosties development team shut down their Twitter account, disappeared from Discord, and stopped responding to messages from the community. Investors also noticed that the Frosties wallet address went missing from the landing page on OpenSea, indicating a classic rug pull. Upon further investigation, it was revealed that the bulk of the invested funds were transferred out of the original wallet, leaving a balance of just 1.3 ETH, equivalent to $4,282.86 as of the time of writing.
(Source: Etherscan.io)
As the realization dawned on investors that they had suffered a rug pull, the community began scrambling to take mitigative action. In the absence of communication from the original development team, the community has had to band together on a new Discord channel and propose alternative solutions.
Community scrambles to save project
The group on the new Discord channel is working on a wrapped contract for the project that aims to “unrug” Frosties and recover the lost funds. While this situation is extremely creative and technically complex, the fact remains that it is a tough task to pull off. The new channel includes 1,452 members who are outlining a new plan for the project.
A new governance model, roadmap, and plan to recover funds are on the way. Despite these efforts, recovering funds will take a while and investors will have to remain patient. A new development team is expected to take over shortly, and it remains to be seen how effective the new roadmap will be. Frosties will be a particularly challenging situation for those investors who entered the NFT world for the first time.
Frosties highlights the importance of carrying out due diligence on prospective projects. However, it also shows that investors remain vulnerable despite detailed due diligence efforts. No matter how sound an investment looks, various risks remain. Adopting insurance solutions like Insured Finance provides the necessary protection for digital assets by making sure that whenever hacks, rug pulls, stablecoin failures or other similar setbacks occur, invested funds are fully protected and returned.
The victims of Frosties NFT rug pull remain hopeful. However, there is no certainty that their funds will be recovered. Any victim with an Insured Finance cover would have been been fully eligible for compensation.
About Insured Finance
Insured Finance is a decentralized, peer-to-peer insurance marketplace. Users can request customized insurance on a wide variety of digital assets, thereby ensuring full protection. Those fulfilling requests can earn premiums and earn a competitive return on their capital. Claims are fully collateralized and settled instantly.