A Report by Solidus Labs Has Revealed the Alarming Scale of Fraudulent Activity on the Solana Blockchain

By CoinDesk

A new report by Solidus Labs has highlighted the alarming scale of fraudulent activity on the Solana blockchain, with 98.6% of tokens launched on Pump.fun being identified 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, but just 97,000 of those tokens still have at least $1,000 in liquidity, the report added.

Pump.fun is a token creation platform that enables users to launch new crypto tokens on the Solana blockchain at a very low cost.

The report adds that the largest rug pull identified by Solidus Labs over the time period was related to MToken and was worth $1.9 million.

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 being $2.8K.

In February, Merkle Science reported that $500 million had been lost to rug pulls and scams in 2024.

Solana has become a popular blockchain among criminals and scammers due to its minimal fees and rapid execution speed, which facilitate the deployment of tokens and withdrawal of funds.

Recently, the SEC has been increasing its efforts to crack down on crypto fraud. In March, the regulator announced the formation of a specialized Cyber and Emerging Technologies unit within its Division of Enforcement. This unit is focused on identifying and pursuing those who are using new technologies to deceive investors.

Later that month, the regulator launched a class action lawsuit in a bid to recover funds for those who were defrauded by members of the M3M3 meme coin community. The suit names several individuals alleged to be involved in the $69 million rug pull.