A report by Solidus Labs has revealed the alarming scale of fraudulent activity on the Solana blockchain, with 98.6% of tokens launched on Pump.fun being chalked down as rug pulls or pump-and-dump schemes.
More than seven million tokens have been issued on Pump.fun since its inception in January 2024, with just 97,000 of those maintaining at least $1,000 in liquidity, the report added.
Pump.fun is a token creation platform that lets users issue new crypto tokens on the Solana blockchain at a very low cost.
The largest rug pull Solidus Labs identified over the time period was worth $1.9 million and was related to MToken.
Whilst the crypto industry has progressed and moved on following the spectacular implosion of FTX, hacks and scams are still rife with bad actors embezzling millions of dollars worth of assets by capitalizing on retail greed.
The memecoin sector is the greatest example of that, with 10s of thousands of bogus tokens being created every day. The hype around memecoin reached a crescendo in January when U.S. President Donal Trump touted his own TRUMP memecoin on social media. Shortly after the U.S. First Lady Melania Trump promoted MELANIA, both tokens are now down by 87% and 97% respectively, with a cabal of insiders reportedly profiting more than $100 million by buying the token before it was publicly available.
Meanwhile, on decentralized exchange Raydium, Solidus Labs found that 93% of liquidity pools (361,000 pools) exhibited soft rug pull characteristics, with the median rug pulls worth $2.8K.
In February, a Merkle Science report revealed that $500 million had been lost to rug pulls and scams in 2024.
Solana has emerged as a popular blockchain among criminals and scammers. Its near-zero fees and instant execution make it easy to deploy tokens and extract value.
Regulators are keeping a watchful eye over the sector. In March, the SEC set up a Cyber and Emerging Technologies unit designed to “root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.”
The regulator filed a class action lawsuit against Meteora in April, naming individuals associated with the M3M3 meme coin, alleging that they were responsible for a $69 million rug pull.
