Rug Pull

A rug pull is a type of crypto scam in which the people behind a project suddenly withdraw its funds and disappear, leaving investors with worthless or untradeable tokens.

How it works

Typically the team launches a token, hypes it to attract buyers, and provides liquidity so it can be traded. Once enough money has flowed in, they drain the liquidity or dump their own large holdings, collapsing the price. Some rug pulls are coded directly into the token contract, which may block buyers from selling at all.

Why it matters

Rug pulls are one of the most common scams in crypto, especially around new, anonymous tokens. Warning signs include anonymous teams, unaudited contracts, unlocked liquidity and promises of guaranteed returns — reasons to research carefully before investing.

Example

A freshly launched token that soars on hype and then crashes to zero as its creators cash out is a classic rug pull.