A ‘War on Rugs’ Has Been Declared Against Ethereum Creator Over SHIB Transfer

In brief

  • Ethereum co-founder Vitalik Buterin incensed Shiba Inu token holders by getting rid of his holdings.
  • The market for SHIB collapsed.
  • Now, one group wants to collapse the market for ETH.

The Telegram group War on Rugs hates rug pulls. So, naturally, it’s…trying to pull the rug out on Ethereum.

The watchdog group, which says it’s composed of developers and auditors, has created the Rug Ethereum (RETH) token in retaliation for Ethereum co-founder Vitalik Buterin’s decision to transfer millions in Shiba Inu (SHIB) to charity while simultaneously crashing the market for the token.

“Vitalik rug pulled Shiba, innocent investors have been hurt,” War on Rugs told Decrypt via direct message the day before launching the token. “He should never be shown as a hero for this.”

Binance CEO Changpeng Zhao, who agreed to list the token on Binance’s “Innovation Zone,” has called SHIB “super high risk.” And War on Rugs, which looked at the smart contract, noted earlier this year that Buterin had a very large stake in the token, which meant it could be vulnerable.

A rug pull is a type of scam in which developers abruptly leave a project and take investors’ money with them. They’re common in the Wild West of decentralized finance (DeFi), where people can go to get crypto loans, earn interest, and trade assets without the help of a financial intermediary—or the insurance such intermediaries provide. 

Buterin, however, didn’t develop the token—he received it. The creators of the meme token sent trillions of the sub-penny asset to Buterin, who is revered among Ethereum acolytes for his intellectual prowess and his seeming lack of concern for the things money can buy. No Lambos here. Sending the funds to Buterin’s wallet lent the project the veneer of legitimacy while also theoretically decreasing the supply because Buterin wouldn’t touch the funds. 

Theoretically. On Wednesday, Buterin did just that, removing the tokens from a liquidity pool in Uniswap and contributing to a crash in token price. As recently as Tuesday, the price of SHIB was $0.00003394. By Thursday, it had fallen by more than half, to $0.00001563.

“If you consider a ‘rug pull’ to be quickly, without notice, removing a damaging amount of liquidity from a pool, then I guess that’s what Vitalik did,” DeFi researcher Chris Blec told Decrypt. “The fact that he never asked for the liquidity in the first place definitely changes things though.

Blec continued: “The SHIB token project was originally deployed with a specific set of risks and a whole lot of inherent problems. Vitalik didn’t change any of that. He simply exposed the token for what it was.”

Buterin, meanwhile, was feted in some camps as a hero for shucking off a project he didn’t want to be associated with and giving the loot to charity. SHIB is run on the Ethereum blockchain, where its burgeoning popularity contributed to high transaction fees and network congestion, already a problem for the network. Buterin has yet to speak publicly about his motivations.

To War on Rugs, Buterin is the villain. 

The RETH token, available on PancakeSwap, is its ironic revenge. Each transaction using the token incurs a 4% charge, half of which goes to holders and the other half of which goes toward borrowing ETH. 

That ETH is then dumped on DeFi crypto lending marketplace Venus Protocol in favor of Binance Coin. (Venus, unlike many other DeFi lending platforms, is built atop Binance Smart Chain, not Ethereum.) This, says War on Rugs in a Medium post, will ultimately “create constant sell pressure on ETH pairs on BSC,” meaning the price of ETH will become depressed. (In a twist, it also sent Vitalik 50% of the 100 quadrillion supply, though it has banned his wallet from using it.)

RETH has more than 2,100 holders since going live this morning, according to blockchain tracker BscScan. 

The move adds additional intrigue to a brewing cold war between Ethereum and Binance Smart Chain, a rival network for DeFi applications established by cryptocurrency exchange Binance. Some have argued that Binance benefits from congestion on Ethereum, providing it motivation for listing bulky speculative tokens such as SHIB on its own exchange.

And, now, it will literally be getting the benefits of RETH sales, whether it has the appetite for this rug pull or not.


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Argentina Orders Crypto Exchanges to Give Monthly Reports on Users

In brief

  • Argentina has taken steps in recent months to regulate the crypto industry.
  • The moves come as the country tries to fight capital flight.

Argentina is updating its regulatory framework to include more controls on financial operations related to cryptocurrencies.

As a result, Argentina’s tax authority, AFIP, is demanding monthly reports on client data from crypto exchanges in the country, with the release of Form 8126.

The regulation targets payment processors and non-bank entities that offer some financial services, including crypto exchanges. The mandated disclosure is extensive and includes a complete list of users, the movement of funds, and the available balances at the end of the month.

The formalization of this document comes after an initiative from the Central Bank of Argentina requiring all banking institutions domiciled in the country to provide personal information of clients known to have dealt with cryptocurrencies.

The Central Bank in April demanded any information that would identify customers who held crypto asset accounts or were engaged in the purchase, sale, and/or management of crypto payments. The Central Bank also asked for data of third parties authorized to move such funds.

As Decrypt previously reported, the government of current President Alberto Fernandez is trying to control capital outflows, the devaluation of the Argentine peso, and tax evasion. The Argentine peso lost 10% of its value between January and early April. Clamping down on cryptocurrency transactions is an obvious step. Cryptocurrencies are booming in Argentina not only because of their store of value properties but also because they have been off the radar of the traditional financial system.

Argentinian politicians are working to change that. A proposal from the ruling party wants the AFIP to take charge of the ecosystem, whereas the opposition is proposing shared responsibility among the AFIP, the Central Bank, and the CNV (Argentina’s equivalent to the US Securities and Exchange Commission).

Within Latin America, Argentina has the seventh-highest Bitcoin trading volume on P2P platforms. But, according to information from MakerDAO, the use of stablecoins such as DAI, is growing.


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Analyst Names Top Crypto Assets Beyond Ethereum, Says Bitcoin Remain Bullish Despite Pullback

Popular analyst and trader Michaël van de Poppe is providing his take on the latest market correction while naming a set of altcoins that have caught his attention.

Although the market is down amid news that Tesla will stop accepting Bitcoin as payment until the cryptocurrency meets the company’s energy efficiency standards, Van de Poppe is telling his 288,000 followers not to fret.


“It’s great to see the strength on altcoins. Yes, we’ve got some news regarding Bitcoin and Elon Musk (Tesla CEO), but essentially, not much has changed.

Markets are still bullish.”

In a new video the analyst tells traders that Bitcoin’s swing below $50,000 is a “normal corrective move,” which Van de Poppe anticipated would occur even without Musk’s recent tweets.

Van de Poppe notes that the altcoin market is holding up well, and that many assets appear especially strong against Bitcoin.

In particular, the trader is keeping an eye on four assets which he says are building exciting ecosystems.

The first of the set is Ethereum competitor Cardano (ADA), which is performing well amid the crash, up 15% on the day, while the rest of the market is down nearly 8%, at time of writing.

Van de Poppe is also bullish on deflationary blockchain Avalanche (AVAX), which is launching the first asset in its ecosystem, Avalaunch (XAVA) on Friday.


Polkadot (DOT) is another asset Van de Poppe says is looking strong against Bitcoin amid the correction, acting as a signal that altcoins are still primed to advance upward.

“Some altcoins are doing well and I think they are just going to continue. One of them is DOT. DOT is showing that we have strength in the altcoins… Ethereum is also showing strength.”

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Kusama (KSM) price hits new highs as parachain auctions begin to take shape

Major protocol upgrades are one of the most potent sources of price movement for cryptocurrency projects as community members and investors get excited about new features and traders rush in to “buy the rumor and sell the news”. 

One protocol that has seen its price rise to new rights this week despite the overall bearish conditions affecting the market is Kusama (KSM), an experimental blockchain platform and a sister chain to the Polkadot’s platform. Kusama is designed to provide an interoperable and scalable framework for developers.

Data from Cointelegraph Markets Pro and TradingView shows that after dropping to a low of $378 on May 10, the price of Kusama rallied 55% to a new all-time high at $591.55 today thanks to a record $1.568 billion in 24-hour trading volume.

KSM/USDT 4-hour chart. Source: TradingView

Three reasons for the recent price appreciation for KSM include the upcoming launch of parachain auctions, recent integrations that helped enhance the interoperability of Kusama with other networks and increased opportunities to stake or lock up KSM to earn a yield.

Parachains are on the verge of launching

The most significant development for Kusama of late came on May 12 when the project announced that the most recent upgrade proposal was approved by the council and is now a public referendum.

This development provided token holders a three-day window between May 12 and May 14 to vote for the different parachains, crowd loans and auctions that they want to see on the Kusama network.

Since KSM tokens are required to be able to participate in voting, demand for the token immediately increased following the announcement and it continues to rise on May 14 despite an overall downturn in the cryptocurrency market.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for KSM on May 11, prior to the recent price rise and before the announced passing of upgrade v0.9.1.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. KSM price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score fluctuated in and out of the green zone over the previous week before climbing to a high of 70 on May 11 at roughly the same time that the price of KSM began to break out to a new all-time high over the next 32 hours.

Interoperability integration provides a spark

A second source for KSM’s price growth over the past month was the April 23 announcement that Chainlink awarded a grant to ChainSafe Systems to help expand support for Kusama on the Chainlink Oracle Pallet.

As seen in the tweet, the expanded support enables developers to build hybrid smart contracts on DOT and KSM parachains along with other substrate chains, significantly enhancing their interoperability capability.

With one of the originally stated goals of the Polkadot network being increased interoperability across all blockchain networks, this development helped reassure community members that meaningful steps were being taken in regards to this goal by enlisting the most trusted and widespread oracle platform in the crypto ecosystem.

New staking and yield opportunities

A third motivating force behind demand for KSM is the attractive yield opportunities offered to token holders willing to stake their KSM tokens on the network or with new parachains.

Data from staking rewards shows that the average rate of return for staking and delegating KSM on the network is 13.72% while running a validator node earns 14.72%.

As part of the parachain auction process, projects like Karura have elected to conduct a crowd loan which involves community supporters bonding their KSM with that protocol for the duration of the parachain lease in return for the native token of the parachain.

The crowd loan allows the project to meet the requirements to obtain a parachain lease for a specified period of time and all KSM tokens are returned to the contributors after the lease is up.

In return for locking their tokens for an extended period of time, community members are rewarded with the native token of the parachain in question but lose the ability to earn KSM staking rewards.

The crowd loan model is an innovative new fundraising design for crypto projects that has excited community members who are eager to obtain their favorite KSM-based tokens while also being able to retain ownership of their KSM.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.