Meme Coin Teddy Doge 'Soft' Rug Pulls $4.5M Worth of Tokens, PeckShield Says

Wallets connected to developers of BNB Chain-based Teddy Doge sold over $4.5 million worth of its TEDDY tokens for other cryptocurrencies over the weekend, causing concerns among investors.

Wallets connected to Teddy Doge’s deployer contract exchanged TEDDY tokens for thousands of wrapped BNB, a BNB equivalent issued on Ethereum, from several accounts over the weekend, security firm PeckShield said on Monday.

“The deployer deployed the contract and transferred a large quantity of $Teddy to 0xdbe8ef79a1a7b57fbb73048192edf6427e8a5552, then pump and dump the price of $Teddy,” PeckShield said, terming the actions as a “soft rug pull.”

South Korean blockchain security firm Sooho also termed the project a "soft" rug pull. "Rather than cheating on the code, it seems that the distribution allocated to the manager's account was divided and sold in bulk," said Jisu Park, CEO of Sooho. "It's not a hack, it's a rug. But it's unclear whether they've abandoned the project, so we can call it a “'softrug.'”

Addresses connected to the project exchanged TEDDY for wrapped BNB, which in turn was exchanged for over 10,000 BNB and 2 million BUSD, PeckShield added. The converted funds were then sent to crypto exchange Binance.

This was possible as the rogue developers controlled the project's liquidity pools. Liquidity pools refer to the token pairs held by smart contracts on decentralized exchanges, such as PancakeSwap, with developers initially seeding both sides of a token pair.

In decentralized finance (DeFi), rug pulls are scams where the developers conduct legitimate work on a blockchain and then drain the liquidity pools from the project, essentially "pulling the rug" from under investors and causing a sharp fall in related tokens.

Read more: DeFi ‘Rug Pull’ Scams Pulled In $2.8B This Year: Chainalysis

Meanwhile, project admins said on Teddy Doge’s Telegram channel that they were “not certain whether it is a bug in our cross-chain bridge or a leaked developer wallet.”

“Don't buy tokens for now. We have closed the cross-chain bridge and are in the process of fixing it,” the admins said, adding that TEDDY holders would soon be given DRAC, a new token, as the project was in the process of rebranding to Drac Network.

Teddy Doge, which offers token swap, non-fungible token (NFT) and cross-chain products, had raised hundreds of thousands of dollars in an initial token offering. NFTs are tokens which represent the ownership of a virtual or physical item and cross-chain refers to transactions in which data is sent from one blockchain to the other.

TEDDY prices fell 99.7% in the past 24 hours, CoinGecko data shows.