🚨 SECURITY ALERT: The “Business Pivot” Scam (Paragon Tweaks Case Study)
The Threat:
A specific type of scam where an established or semi-legitimate “Web2” business (like a software provider or agency) launches a token to “raise funds” from their community, only to later “pivot” away from crypto, effectively stealing the liquidity.
The Mechanics (How They Trapped Investors):
- The “Utility” Trap: They didn’t sell a meme coin; they sold a “utility token” ($PRGN) attached to a working product (PC Optimization). This creates a false sense of security because “the business is real.”
- The “Migration” Delay: When investors asked for updates, the team used delay tactics—claiming they were “migrating to a new launchpad” or “waiting for legal approval” from platforms like Epic Games.
- The “Soft Rug”: Instead of disappearing completely (Hard Rug), they simply announced: “We are stopping the crypto project to save our main business.”
The Result: They keep the money raised from the token sale. You keep the worthless tokens. They continue running their PC tweak website as if nothing happened.
🛡️ ShieldGuard Defense Guidelines:
- The “Revenue” Rule: Never invest in a service-based token unless the Smart Contract automatically captures revenue (e.g., a buy-back and burn mechanism). If the “utility” depends purely on the founder’s promise to accept the coin later, it is a high-risk trust trade.
- Check the Terms: Many “Soft Rugs” hide behind Terms of Service that state the token “has no monetary value” and is “for entertainment only.” This allows them to abandon it legally.
- Community Silencing: If a project bans users for asking “When utility?” or deletes message history (as Paragon did on Telegram), it is an immediate Exit Signal. Sell immediately.
⚠️ Lesson:
A “doxxed” team with a “real product” can still scam you. In fact, they often use their reputation to extract more capital than an anonymous team could.
Stay Shielded. Verify Everything.
