Crypto glossary
Rug pull
A rug pull is a scam in which a crypto project's creators suddenly drain its funds or liquidity and disappear, leaving token holders with worthless assets.
The most common version happens on decentralized exchanges. A team launches a token, pairs it with ETH or a stablecoin in a liquidity pool and promotes it heavily. Once enough buyers have put money in, the creators withdraw the pool's liquidity or dump a large hidden allocation, and the price collapses to near zero.
Other variants include malicious smart contracts that block holders from selling, hidden functions that let the owner mint unlimited tokens, and projects that raise money through presales and then abandon development.
Warning signs include anonymous teams, unlocked liquidity, a few wallets holding most of the supply, unaudited contracts and promises of guaranteed returns. Memecoins launched with little more than a name and a logo are frequent targets.
Example
A new token attracts $2 million in buys within a week of launch. The deployer then removes all the liquidity from the DEX pool, swaps it for ETH and sends it through a mixer, and the token becomes untradeable.
Related terms
Latest articles on Rug pull
- Solana’s Token Economy: Verifiable Growth and Quantifiable Rug Pull Risk
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- Solana’s Latest Absurd Scam: From Eight-Figure Gains to a Tiny $260 Rug Pull
- WhiteWhale Crashes After Rug Pull Allegations as Whales Offload $1.3M in Tokens
- Crypto Rug Pulls Decline 66% in 2025, But Financial Impact Grows
