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What is Rug Pull?
A rug pull is a crypto scam where developers abandon a project and steal investor funds. Common with new, unaudited tokens — always do your own research (DYOR).
Full Explanation
A rug pull occurs when crypto project developers raise funds (through token sale, liquidity provision, or NFT sales) and then suddenly withdraw all funds and abandon the project. Types: hard rug (developers drain liquidity or mint unlimited tokens) and soft rug (slow abandonment, team stops working). Red flags: anonymous team, unaudited contract, locked/no liquidity, unrealistic APY promises, pressure to invest quickly. Always verify: team identity, smart contract audit, liquidity lock, and community history.
Example
The Squid Game token rug pull in 2021 saw the token rise 300,000% before developers drained all liquidity, crashing it to $0 in minutes.
Related Terms
Last updated: 2026-03-21
