In the US, Thanksgiving is a time for families to come together and give thanks for the many blessings in their lives. Around dinner time on Thanksgiving on the East Coast, what appears to be one of the nastier rug pulls in the history of cryptocurrency left plenty of investors less thankful and much lighter in their wallets.
The Snowdog coin (SDOG) was based on an eight-day experiment with a buyback promised at the end. However, the buyback never happened. Instead, all of the coin’s liquidity was moved to another exchange. Then, two new Coinbase wallets made exchanges before the exchange webpage was live. The coin lost over 90% of its value in minutes.
Where the story turns fraudulent is that the only way the exchange could have taken place is with a “challenge key,” which only Snowdog insiders knew ahead of time. The situation was discussed on the CryptoWendyO show here:
“This certainly looks like an inside job where someone made millions of dollars on two transactions,” says MacguyverTech’s Steven McKeon (Mac). “They didn’t follow up on their promises, and unfortunately, a lot of people got wrecked. They liquidated within three or four seconds before it was launched. Someone knew something before everyone else did, and went straight to the target to liquidate everything in one shot.”
@SnowdogDAO $SDOG rugpulled. Here's how:
1. Promised a 40M buyback happening on its own DEX Snowswap and migrated all liquidity from Joe
2. Snowswap contract requires a "challengeKey" to trade which only insiders knew it beforehand
3. Insiders backran the buyback and made 10M pic.twitter.com/tfKDqA4t4I
— TechnoArtoria (🦇,🔊) (@artoriamaster) November 25, 2021
Snowdog published a postmortem here, but most simply aren’t buying it. “The postmortem didn’t address any of the concerns,” McKeon continued. “It was really wishy washy, and tells me they don’t care. They’re trying to cover their butts any way they can. That project has a super-high risk; I’d avoid them at all costs.”
the address is 1 day old.
deposits 46.7eth from @FTX_Official to a newly created address –> bridge 46.7eth to avax –> swap eth for $189k MIM –> buys $SDOG $10k each transaction with $MIM –> sells everything for ~$10.4M as the first seller. pic.twitter.com/RH15MzDRu2
— crypto jadoo (@CryptoJadoo) November 26, 2021
So how do crypto investors avoid this in the future? The crypto finance world has repeatedly been referred to as the Wild West of investing, and as such, fortunes can be made and lost quickly in a near-lawless environment. So how can we avoid the next Snowdog without having to hunt down the white hats to make things right? There are a couple things that seem like common sense, but are often missed in the rush caused by Fear of Missing Out (FOMO).
Do your research. If a crypto investment looks too good to be true, look harder and make sure it isn’t too good to be true. Is the Whitepaper sound? Is it well-written? Is the project fully transparent? Is the project team doxed? If the answers to any of these questions is “no,” this should be a red flag.
@OVHcloud @ovh_support_en You might want to look into this domain https://t.co/jqXAfGd1NS and https://t.co/VQKFAfb7HO that is registered with you. this company has performed fraud and made a lot of people lose money today with their project @SnowdogDAO pic.twitter.com/2ZhYsFMlkn
— Steven McKeon (Mac) (@macguyvermedia) November 26, 2021
Only invest what you can afford to lose. This seems like the most common-sense thing of all, but the excitement of a hot cryptocurrency market can send reason out the window.
Trust your instincts. This will fall back to the “too good to be true” point. To borrow from Malcolm Gladwell, we have an “adaptive unconscious.” We know in our gut that something isn’t quite right, even with a newer field like cryptocurrency. If it looks shady or feels like a scam, get out.
Be wary of new projects. Short-lived projects are far more susceptible to rug-pulls. Not every short-term project that fails is fraudulent, but that doesn’t mean it’ll be successful. Like small businesses, there are plenty of internal and external factors that can make a project fail. Let it prove itself before you sink a lot of money into it.
Sometimes risk comes with reward, but sometimes it comes with tremendous loss. Some people lost an enormous amount of money on Thanksgiving. So as always, do your research, play nice, and be careful out there.
UPDATE 11/27/2021 12PM EST
This event has taken a darker turn; I was saddened to hear on Twitter that someone took their life due a bad investment into the Snowdog project. He left behind two boys and a broken family. As many of you know, this hits home for me as I to lost my father to suicide many years ago. I’m a big supporter of suicide awareness and prevention.
We will be filing a report to FBI cyber-crime for what has happened; we lost our investment, and have been doing an investigation into what happened. The only way we will see justice is by working together and reporting what happened to the authorities.
Below, I’ve provided resources for anyone who needs them. Make sure you have detailed information and screen shots, as this group is known for deleting things to cover their tracks. Good luck and God bless everyone!
USA FBI Cyber-crime (have detailed info)
Europol Cyber-crime – France
United Kingdom Cyber-crime
Snowbank Social media accounts
Discord Management Team
Yeti#1995 (also manages SnowbankDAO Twitter account)
https://www.snowbank.finance (IP 184.108.40.206 AWS)
SnowDogDAO insiders Wallets