Risks of Rug Pulls in Crypto Casinos

There is a form of rug pulling in the world of crypto that has been completely ignored. While it has occurred and people have lost money because of it, practically no one has discussed it on a major platform. That is why we have decided to dedicate this insight to warning you about a very real danger that you yourself are exposed to every time you look for a new online casino. The danger is a crypto-first casino convincing you to take its in-house coins seriously, bumping up the price, and then running away with a huge sack of profits. Here is how to spot the warning signs and understand exactly how rug pulls occur in crypto casinos.

How a Crypto Casino Can Rug Pull

The idea of a crypto casino rug pulling may seem very silly, especially since casinos have an incentive to build a solid, long-lasting reputation, but it is more possible than you might think. The venues that rug pull tend to be small, usually brand new, and they use the following script:

• They launch their very own token and promote it heavily through the casino’s website.
• Punters are incentivized to accumulate or buy tokens while the price is low, with some venues simply giving out a starting sum to their punters.
• The casino fully integrated its token into various aspects of its website, such as the bonuses, staking rewards, exclusive games, in-house shops, tourneys, and more. All of these are intended to hike up demand.
• A hired or owned third-party promotion or buyer appears to inflate the value of the casino’s in-house token, thus driving up hype and price growth.
• As soon as the price peaks, the casino, or rather the insiders, sell their holdings and leave punters holding an increasingly worthless bag.
• The token fully crashes, regular punters are left with massive losses, crypto investors are left with pennies, and the casino quietly starts shutting down.

Anyone familiar with rug pulls will tell you that this is a classic script, but it is far more alarming, as casinos are usually viewed as far more trustworthy than random crypto promoters on the internet, as a casino’s tokens have actual usage within the casino itself.

Smaller Casinos, Huge Risks

Now we know what you are thinking, nobody would ever buy a custom cryptocurrency from an online casino if the casino was not licensed. Well, that is partly true, as some even play at unlicensed casinos, which is a recipe for disaster, but we get your point. However, a small casino may get a valid gaming license and try a rug pull nonetheless.

Why is this the case? Well, opening a company has been a very quick process for a while now. Getting a license is also easier than it ever was, with entire companies soliciting the license for emerging casinos.

Bad actors can, therefore, relatively quickly set up casino companies, get licenses, and launch websites that look completely believable. Then they follow the script that we outlined earlier and line their pockets with quick cash before disappearing. A smaller casino, therefore, holds a bigger risk for a crypto rug pull.

The Warning Signs

But we do not want to make you paranoid and untrusting of small casinos. Some of our favorite online gaming venues with the best casino bonuses are small casinos after all. We have prepared the following list of warning signs to help you spot red flags and give fair small crypto casinos a chance:

• Lack of Transparency – Is a casino claiming to have a gaming license but does not link to a verified certificate? Then it might just be a scam site preparing a rug pull.
• Unclear Tokenomics – Every token should clearly explain its supply distribution, vesting schedules, and how the tokens are allocated. Everything else is cause for alarm.
• Overhyped Marketing – Is a venue being very aggressive with its advertising campaign or even rushing you into token purchases? Consider why they are so keen to get rid of potentially valuable crypto so quickly.
• Weak Utility – Does a crypto casino’s token feel like it is pointless? Consider avoiding the token completely or switching casinos if a token feels more like a marketing stunt than a valuable addition to your gaming adventure.
• No Independent Audits – A regular casino being audited by a third party is a massive seal of approval, but a crypto casino with a custom token being audited by a third party is a must.

The Hidden Dangers for Regular Punters

Even the most aggressive marketing will not convince some players to go out of their way and purchase a casino’s tokens on a regular crypto market, but even these holdouts are at risk of being rug-pulled.

See, a crypto casino with an in-house token loves to distribute it. It may even be paid out as a form of winning or the main winning in particular games or bonuses. Once a rug pull occurs, all such tokens are rendered worthless, and the value that punters stored in them is reduced to zero. You are then left holding a worthless bunch of tokens that you often cannot even wager anymore, as the casino that you played at has disappeared.

This disappearance is also part of the problem, as a crypto casino may just vanish overnight, taking your deposit, bonus funds, and any winnings along with it.

The Best Protection

By far the best way to protect yourself from rug pulls in crypto casinos and to always stay safe at venues that heavily advertise their in-house token is to only play at online casinos that have been reviewed by our team of industry experts. And remember, when in doubt, head out and find another crypto casino.