The true story of a cryptocurrency rug pull
We are all suckers for a good story.
The best stories are the ones that provide you with a light bulb moment. I much prefer stories about how a business idea is going to solve a particular problem and leave me multiple times richer than the story from a girlfriend about her day at the office and how her training is going for her upcoming marathon. The latter is guaranteed to put me to sleep, the former will light a fire inside of me.
And so it was with Candela Coin.
Like many of us hunting for the next big thing in cryptocurrency we uncovered Candela Coin after reading a short post on a Reddit forum. It is the small hidden posts that usually reap the most lucrative rewards. This post wasn’t your normal spam you find on most Reddit crypto forums. It was more thought out and immediately captured our imagination.
‘A project which aims to cut out the big electricity corporations by allowing end users to share solar power generated from their own panels via micro grids. All powered by the Candela Coin. All this for a valuation of $100,000. The founder was also doxxed, always a good sign. Compared to its nearest competitor, Power Ledger with a market cap at the time of $100 million, Candela was looking like a diamond in the rough!’
Whilst we liked the look of Candela we realized execution was key to its success. It wouldn’t be cheap to roll this concept out to the masses. When we quizzed Candela’s founder Avi he told us he was independently wealthy from a previous venture and was able to finance this project from his own resources. Red flag #1.
In the space of a few months the price of CLA climbed steadily as more people discovered this project and bought into its story.
CLA was originally a ERC-20 token which as we all know is expensive to buy with extortionate gas fees. In order to overcome this objection Avi set up the same coin on BSC. One token was supposed to be a store of value and the other a utility token. Which one was which was never totally clear. It was always assumed that the proceeds from the sale of these new BSC tokens would go towards the project but no one asked the question and Avi didn’t dwell on the subject. Red flag #2.
When the NFT craze started Avi decided that he would launch a range of NFTs. That was quickly followed by his announcement that Candela would be entering the metaverse. What the hell these two initiatives had to do with Candela’s core business is anyone’s guess. Laser focus is essential to the success of any startup. Red flag #3.
Whilst all these developments were going on a few disgruntled CLA investors started to share private messages they had received from Avi and his merry band of angry helpers. It became very clear that Avi and co were in the habit of threatening and abusing anyone who questioned his decision making and the legitimacy of his project. Derogatory comments about investor’s mothers were just the tip of the iceberg. Red flag #4.
From these private messages it also became clear that Avi was holding tokens on behalf of investors and refusing to hand them back. A red flag right there. Red flag #5.
In order to attract bigger investments Avi launched a whale group. To qualify investors had to invest a minimum of one million tokens (around $1,000 at the time). In exchange investors would receive additional benefits including a Candela branded solar panel that it was developing, according to Avi anyway. Despite multiple promises these panels never arrived. Red flag #6.
There were multiple other red flags. Like the time when Avi announced that Candela was going to list on the Canadian Stock Exchange. He then qualified this by saying that he would need to raise money through a share issue first. The big venture capital firms he told us he had closed never materialized and the $100,000 he raised no doubt went straight into his well oiled pocket.
His final lie was his promise of a listing of CLA on a large central exchange. That announcement was made on Friday and the listing was scheduled for the following Monday.
It was a cold grey day when I awoke on Monday at 5am. The first message I opened was from a community member who was asking why the CLA Telegram channel had restricted chat and their Twitter account was closed. Avi had also changed his Telegram name to ‘ABC’.
Within a few hours everyone was screaming rug pull!
Avi had gone to ground. Some speculated that he had run off to his newly built Mexican mansion with his ill gotten gains.
Within 24 hours Avi re-emerged. It was a hack he insisted. Why would he throw all his hard work away for a few dollars he complained. The listing was on schedule for next Monday he promised. Oh and for good measure, I was a total loser for doubting him.
Then he disappeared again and hasn’t been heard from since. Rug pull complete.
No doubt Avi walked away with a couple of million dollars from his scam. He is probably trying to enjoy his Christmas surrounded by Mexican hookers, cheap cocaine and Tequila with the sole purpose of taking his mind off the chaos he left behind. He is no doubt under the illusion that he got away with it. But he forgot one thing. He stole from Americans. The Feds have a low tolerance for such shenanigans. His time will come. Hiding in Mexico didn’t help El Chapo, it won’t help Avi Shane Verdugo…
According to a recent report, 73% of projects listed on PancakeSwap will turn out to be scams. What this sad story demonstrates is there are an abundance of believable and compelling stories circulating the cryptocurrency ecosystem. A minority will be real and from those real ones only a fraction will succeed. That is why it is important that when investing in this market you must take profits. Don’t HODL, as Avi and his merry band of supporters had urged investors. When you hear the word ‘HODL’ remember, that is red flag #7. Sell!
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Not Financial Advice
This article does not constitute financial advice or a recommendation to buy in any way. Always do your own research and never invest more than you can afford to lose. Investing in cryptocurrencies is high risk, and you could lose 100% of your investment. The article should be treated as supplementary information to add to your existing knowledge.