[Exclusive] IPX Faces Rug-Pull Allegations After NFT Community Abruptly Shuts Down

IPX ensnared in NFT rug-pull allegations

Issuing partner disappears after shutting community

"Promises unfulfilled" as prices tumble 95%

IPX, the digital IP entertainment company formerly known as Line Friends, is facing allegations of an NFT rug pull. The controversy erupted after CRIPCO, the partner that issued the NFTs, abruptly shut down its community and went silent. Suspicions have since spread that the companies effectively withdrew from the business and abandoned investors, especially after a project named as the destination for the community denied any connection to CRIPCO.

Line Friends changed its name to IPX in 2022 and announced its entry into the NFT business, signing an agreement with NFT platform CRIPCO. CRIPCO then effectively took charge of IPX's NFT operations. IPX also joined CRIPCO DAO, the project's decision-making body, underscoring the close ties between the two sides.

IPX later rolled out a series of digital assets through CRIPCO using its characters, including Wade and OOZ. Wade drew particular attention after the company said it had partnered with G-Dragon's fashion label Peaceminusone and was preparing a collaboration.

Bloomingbit reported that the companies unilaterally shut down their official Discord channel on May 29, cutting off a key communication channel for NFT investors. They have not responded to investors' questions since.

Just before deleting the channel, the project said the existing community would be integrated into the ecosystem of blockchain infrastructure project Creditcoin. But Oh Tae-rim, chief executive officer of Gluwa, the developer of Creditcoin, said his company had no connection to CRIPCO. Investors have since complained that they were caught in a textbook rug pull.

A considerable amount of time has passed since the NFTs were launched, but most of the benefits originally promised have gone unfulfilled. For its flagship Wadeside project, the company had promised token rewards based on the amount held and holding period, along with exclusive merchandise and offline events. Bloomingbit found that virtually none of those commitments had been properly carried out. That stands in sharp contrast to the aggressive marketing at launch, when the company leaned on its corporate credibility.

One investor said they bought the NFT based on Line Friends' brand recognition and the promised rewards. "Not only did they fail to keep their promises, they shut down the communication channel and went silent. That's clearly fraud," the investor said.

Another investor said the only items received so far were one T-shirt and a useless storybook. The person said the current price has fallen so far from the purchase level that selling is no longer realistic.

The NFTs' value has plunged in the meantime. Wadeside's current floor price stands at 0.0295 ETH, or about $58, down about 95% from its auction sale price of 0.34 ETH, which was worth about 1.5 million won, or roughly $1,085, at the time. OOZ has also collapsed, with its floor price falling from about 0.033 ETH in 2024 to 0.0008 ETH now, leaving it effectively worthless.

Some have also raised the possibility that CRIPCO was a hastily assembled paper company created solely for IPX's NFT business. CRIPCO's registered address matches that of Atos Singapore Consulting, a firm that helps establish Singapore corporations. The fact that CRIPCO was incorporated just three months before entering into its partnership with IPX has added to those suspicions. On Blind, South Korea's anonymous workplace community app, posts described as internal whistleblower accounts also claimed that Line Friends had already abandoned its NFT business and that CRIPCO was nothing more than a Singapore paper company.

In response, IPX told Bloomingbit that, as the original owner of the character intellectual property, it would continue to play an active role and work closely with related parties so the matter can be handled responsibly. The company said asset holders would receive separate guidance later. It added that CRIPCO is a separate company conducting NFT-related business using IPX's intellectual property.