Cryptocurrency project Encryption AI crashed to almost zero value this week after its developer made off with about $2 million to satisfy his online gambling addiction.
The price of 0XENCRYPT, the native token of the Encryption AI ecosystem, plunged over 99% to under $0.02 from $2.07 after the “rug pull”. According to CoinGecko data, the token has slumped from a peak of $15.41 reached on May 21, 2023.
The project’s total market value crashed from more than $2 million to just $21,000 within seconds. There are no prospects that investors will be compensated.
A rug pull occurs when a cryptocurrency developer brings a new project and allows people to buy tokens before disappearing with their money.
Blame it on the addiction
Reports on social media say that Encryption AI claimed to offer a secure and efficient way to launch new tokens. The project employed a variety of bots that helped users find and assess token launches, claiming the platform was designed to protect users from scams and fraud.
MetaNews could not independently verify how the theft happened. In similar situations, however, holders of the token would typically be not allowed to sell the asset for some reason. Instead, founders would dump the token and cash out clandestinely.
In the case of Encryption AI, the developer took the unusual decision of admitting guilt, but blamed his actions on “a severe addiction to online gambling and casinos.” The 22-year old remains anonymous, and there is limited information available about them.
“I would like to make an important announcement and apologize for my recent actions,” the developer wrote, according to screenshots of chats posted on Twitter.
“During the liquidity migration from v1 to v2, I must confess that I have fallen into a severe addiction to online gambling and casinos. I have lost nearly $300,000 over the last few months… [and] never intended to scam the project.”
Another day, another rug.#0xEncrypt just hard rugged during the migration.
From 2M marketcap to 20k in seconds.
Dev said he had a gambling addiction and needed to recover money, another one for the book. pic.twitter.com/lc4wSC7zCT
— bulla (@BullaOF) July 3, 2023
Encryption AI won’t reimburse
Cryptocurrencies based on memes or related to internet culture have often reported rapid booms and busts. Encryption AI clearly intended to cash in on the artificial intelligence hype that began with the launch of OpenAI’s popular chatbot ChatGPT in November.
The project joins a growing list of rug pulls to have occurred in 2023. Morgan DF Fintoch pulled one of the biggest heists this year, rugging $31.6 million. It claimed to be backed by Morgan Stanley. Recently, developers at Chibi finance made off with more than $1 million.
The Encryption AI developer said they were unlikely to compensate investors.
“Although I cannot guarantee when or if I would be able to make amends and relaunch 0xEncrypt, I promise that I will make every effort to become a better person,” the developer said.