Rug pull
Also called: rugpull · rugged · exit scam
Definition
A rug pull is a scam where the creators of a crypto project suddenly drain its liquidity, dump their tokens or abandon it after attracting buyers, leaving the token close to worthless.
This entry is shown in English.
How Rug pull works
Rug pulls are most common with new tokens on decentralized exchanges, especially memecoins. A typical pattern: the team creates a token, adds a liquidity pool, promotes it hard, and once buyers have added value, removes the liquidity or sells a large hidden allocation. The price collapses in minutes.
Some rugs are coded in from the start, for example a contract that blocks holders from selling, lets the owner mint unlimited tokens, or charges a sell tax the owner can raise to 100 percent. Others are slow: the team stops building and sells gradually.
Things to check before buying a new token: whether liquidity is locked and for how long, who controls the contract and whether ownership is renounced, how much supply sits in a few wallets, and whether you can actually sell a small amount.
Example
Imagine a new token launches with a pool holding 50 ETH and 1 billion tokens. Over two days buyers add another 150 ETH, pushing the pool to 200 ETH. The deployer, who kept the LP tokens unlocked, withdraws all the liquidity and receives about 200 ETH plus the remaining tokens. Holders who bought the token now find almost no ETH left in the pool, so their tokens can only be sold for a tiny fraction of what they paid.
Common mistakes
- Buying a token because it is trending without checking who controls the liquidity.
- Assuming a token is safe because it is listed on a DEX, where anyone can create a pool.
- Not testing a small sell before buying more, which would reveal a honeypot contract.
Learn and practise
FAQ
How can I tell if a token might be a rug pull?
Look for unlocked liquidity, an owner who can mint or change taxes, a few wallets holding most of the supply, and anonymous teams with no track record. None of these checks is a guarantee.
Is a rug pull illegal?
Deliberately deceiving buyers can be fraud in many countries, but enforcement depends on the jurisdiction and whether the team can be identified.