Investors were alarmed after discovering that wallets linked to Teddy Doge (TEDDY), a crypto built on the BNB Chain, traded over $4.5 million worth of its tokens for other crypto over the weekend.
Over the weekend, wallets associated with Teddy Doge's deployer contract exchanged thousands of wrapped BNB tokens, an Ethereum-based BNB counterpart, for TEDDY tokens, according to a report released on Monday by security company PeckShield.
PeckShield described the acts as a "soft rug pull," saying that the deployer "deployed the contract and moved a significant amount of $Teddy to 0xdbe8ef79a1a7b57fbb73048192edf6427e8a5552 then pump and dump the price of $Teddy."
The concept was also referred to as a "gentle" rug pull by the Korean blockchain security company Sooho.
Jisu Park, CEO of Sooho, stated that it appears that the distribution allotted to the manager's account was divided and sold in bulk rather than by breaking the system. "It's a rug, not a hack. However, it's uncertain if they've given up on the project, so we can refer to it as a "soft rug."
PeckShield said that addresses associated with the project traded TEDDY for wrapped BNB, which was then traded for more than 10,000 BNB and 2 million BUSD. The monies were subsequently transferred to Binance, a cryptocurrency exchange.
Due to their influence over the project's liquidity pools, the rogue developers made this possible. Developers initially seed both sides of a token pair in liquidity pools, which are held by smart contracts on decentralized exchanges like PancakeSwap.
Rug pulls are frauds in decentralized finance (DeFi) where engineers work legitimately on a blockchain and subsequently drain the project's liquidity pools, thereby "pulling the rug" out from under investors and triggering a dramatic decline in linked tokens.
On Teddy Doge's Telegram group, project administrators stated that they were "not sure whether it is a flaw in our cross-chain bridge or a leaked developer wallet."
Don't purchase tokens right now. The cross-chain bridge has been closed, and repairs are being made, according to the admins, who also announced that holders of the TEDDY token would soon receive DRAC, a new token, as the project was changing its name to Drac Network.
In an initial token sale, Teddy Doge, which provides token swap, non-fungible tokens (NFTs), and cross-chain products, raised hundreds of thousands of dollars.
Cross-chain transactions include sending data from one blockchain to another, and NFTs are tokens that stand in for ownership of real or digital goods.
The last 24 hours saw a 99.7% decline in TEDDY values, according to CoinGecko data.