Rug Pulls Heard Around the League

Posted by Micah Balazs on

NFTs In The NBA

In December 2021, De'Aaron Fox began posting on his social media accounts about an upcoming NFT venture. NFTs were mostly about purchasing a piece of art that could be owned on the blockchain and maybe one day flipped for a profit. Many newer NFTs, are a bit different in that they serve more as a sort of membership pass into a club. Paying around $400 for Fox's, to get in early and utilize the benefits that he promised down the road. 

He posted a picture of a roadmap of those promises upon the initial launch of the SwipaTheFox project in January. Among other things, he would establish five or more scholarships to the University of Kentucky, hosting metaverse basketball tournaments, raffle off All-Star Game tickets, of course merchandise, and also have one-on-one personalized experiences with him outside of basketball. Green Team members could gain even more benefits like in-person meetings and private chats with the Kings guard worth up to 0.3 Ethereum, around $1,000 at the time. 

De'Aaron Fox created a Discord for the project, which provided an online chat room where users could interact with him personally. In the beginning of the project, Fox was logged in and answering questions on a daily basis. By Feb. 23, around 3,000 people had signed up for Fox’s project. Many fans of Fox and the NBA were drawn into the project for a chance to interact with him and support his vision of building up his community. 

It had raised an estimated 475 eth, worth roughly $1.2 million. That is when the project was unexpectedly canceled aka "Rug Pull". Fox issued a statement in his Discord, explaining that he had "stretched himself too thin and would be unable to continue working on the project". Almost immediately, chat records in Discord were removed, all social media accounts were deleted and Fox turned off commenting abilities on his various social media platforms! There was still an Ethereum wallet containing $1.6 million in funds for the project, it was mostly drained, going through various exchanges in order to make it more difficult to trace. 

Fox has been accused by his NFT holders of rug pulling, which is a common tactic that happens in the space. Project founders will raise money and walk away with all of the funds, shutting down communication channels on their way out to make it more difficult for investors to organize.

While rug pulling is always an inherent risk in the largely unregulated NFT space, it seemed unlikely to them that Fox, who was in the first year of an NBA contract set to pay him $163 million over the next five years, would walk away with a few million dollars of money from some of his biggest fans without delivering on his promises of scholarships, one-on-one interactions and future giveaways. Purchasers of Fox's NFT were caught off-guard because of his personal involvement and overall wealth. Those members of his Green Team had little to no interaction with Fox before the project was stopped. 

Always Do Your Own DD.

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