A new report from Solidus Labs has just revealed the alarming state of fraudulent activities on the Solana blockchain, with up to 98.6% of tokens launched on the Pump.fun platform identified as rug pulls or pump-and-dump schemes.
Since its launch in January 2024, Pump.fun has recorded over 7 million tokens created. However, only about 97,000 of those tokens maintain liquidity of $1,000 or more. Pump.fun is a token creation platform that allows users to issue new tokens on the Solana blockchain at extremely low costs.
Pump.fun volume chart | Source: Solidus Labs
The largest rug pull reported during the period was valued at $1.9 million and involved the MToken.
Although the crypto industry has somewhat recovered from the historic scandal of FTX, hacks and scams continue to proliferate. Bad actors still exploit the greed of retail investors to seize millions of dollars in assets.
The memecoin sector is the clearest example. Every day, tens of thousands of fake tokens are created. The memecoin frenzy peaked in January when U.S. President Donald Trump promoted the memecoin TRUMP on social media. Shortly after, First Lady Melania Trump also introduced the MELANIA token. Both tokens have now dropped by 87% and 97% respectively, while an internal group is said to have made over $100 million in profits by buying before the tokens were publicly listed.
Meanwhile, on the decentralized exchange Raydium, Solidus Labs reported that up to 93% of liquidity pools (equivalent to 361,000 pools) exhibit characteristics of 'soft' rug pulls, with an average value of about $2,800 per incident.
Earlier in February, a report from Merkle Science indicated that a total of $500 million was stolen through rug pulls and scams in 2024.
Solana is becoming the blockchain of choice for criminals and scam groups due to almost zero transaction fees and near-instant processing capabilities – making it easier than ever to issue tokens and withdraw money quickly.
Regulators are also closely monitoring the sector. In March, the U.S. Securities and Exchange Commission (SEC) established the Network Technology and Emerging Technologies unit to 'trace individuals who exploit technological innovations to harm investors and undermine trust in new technologies.'
In April, the SEC filed a class-action lawsuit against the Meteora project, accusing individuals involved with the memecoin M3M3 of masterminding a $69 million rug pull.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do thorough research before making decisions. We are not responsible for your investment decisions.
