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News/The Untold Stories of Crypto Rug Pulls: Lessons Learned and How to Stay Vigilant

The Untold Stories of Crypto Rug Pulls: Lessons Learned and How to Stay Vigilant

Apr 26 2023

last year4 minutes read

Navigating the Perilous World of Crypto Rug Pulls

Written by Van - Perfected by ChatGPT



In recent years, crypto rug pulls have become a notorious buzzword. Investors have lost millions of dollars to these scams, and the trend shows no sign of slowing down. Let’s dive into the world of crypto rug pulls, the biggest ones in history, and how to protect yourself from becoming a victim.

Demystifying Crypto Rug Pulls: A Deceptive Scam Unveiled

A rug pull is a type of scam in the cryptocurrency world where developers abandon a project and run off with investors’ funds. Typically, this happens after the project has gained traction, and the creators have made a significant profit. The consequences for investors can be devastating, as they are often left with worthless tokens and no way to recover their money.

Biggest Crypto Rug Pulls

There have been numerous high-profile crypto rug pulls, but here are some of the recent infamous cases:

  • The Nazaré Amarga Scandal: A Brazilian celebrity tricked NFT community members into investing in a fake token called Math Lady Coin (MATH). Investors lost their money when the token was never launched. The story was later revealed by crypto sleuth ZachXBT.
  • Ordinals Finance Exit Scam: A DeFi project on Ethereum, Ordinals Finance, was accused of an exit scam by CertiK. The developer allegedly withdrew 269 million OFI tokens, worth $1 million, using questionable functions within the contract. The market cap for OFI plummeted, and the project’s Twitter account disappeared.

From these incidents, we can learn the importance of vigilance, thorough research, and recognizing red flags in cryptocurrency investments.

Understanding the Red Flags of Getting Rugged


To avoid getting rugged, be aware of these common red flags:

  • Team anonymity and suspicious backgrounds: If a project’s team members are anonymous or have questionable backgrounds, it’s a major red flag. Legitimate projects usually have reputable and experienced team members who are transparent about their involvement.
  • Lack of clear use case or project roadmap: Projects with no clear use case or roadmap can signal that the team has no long-term plans, making it easier for them to disappear with investors’ funds.
  • Unrealistic tokenomics or promises of high returns: If a project offers guaranteed high returns or has tokenomics that seem too good to be true, be cautious. High rewards often come with high risks, and unrealistic returns can be a sign of a rug pull.
  • Inadequate code audits and smart contract verification: Legitimate projects usually undergo independent code audits and smart contract verification to ensure security and transparency. If a project lacks these verifications, it could be a sign of potential issues.
  • Limited or no communication from the team: If a project’s team is unresponsive or provides vague answers to community questions, it could be a sign that they’re not committed to the project’s long-term success.
  • Sudden changes in the project’s direction or tokenomics: If a project makes sudden, unexplained changes to its goals, tokenomics, or team members, it could be an attempt to confuse investors and create an opportunity for a rug pull.
  • Unusual trading volume or price movements: If a project experiences sudden and unexplained increases in trading volume or price movements, it may indicate market manipulation, which can precede a rug pull.
  • High token concentration in a few wallets: If a significant portion of the project’s tokens is held in a few wallets, it could be a sign that the team is preparing for a rug pull by controlling the token supply.

By understanding these red flags and staying vigilant, you can minimize your risk of getting rugged and protect your investments in the cryptocurrency market.

Tools and Resources to Identify Potential Crypto Scams

To verify projects and access a cryptocurrency scammer list, use research websites like:

  • Coin360, CoinMarketCap, CoinGecko: Popular websites that provide information on cryptocurrencies, including their market capitalization, trading volume, and price.
  • Token Sniffer: A tool for analyzing tokens on 12 different blockchains; users can enter a token contract address to access information on exploits, contract audits, and a list of known scams and hacks.
  • DEXTools, DexScreener: Platforms that provide real-time data on decentralized exchanges (DEXs), including trading volume and liquidity. This can help identify potential scams by analyzing the trading activity of a particular token.
  • Blockchain Explorers, DeBank: Tools that allows users to view the details of transactions on the blockchain, which can help identify fraudulent activity.
  • Bitquery, Nansen, Arkham Intelligence, Bubblemaps: These tools offer data for researching blockchain transactions, including wallet tracking.
  • Twitter: Following reputable crypto influencers and news sources on Twitter can help you stay up-to-date on potential scams and other industry news.

These websites can provide valuable information on team members, project history, and tokenomics, helping you make informed decisions. Remember to always do your own research and exercise caution when investing in cryptocurrencies.

How to Protect Yourself from Crypto Rug Pulls


To safeguard your investments, follow these steps:

  • Conduct thorough due diligence: Research the project, team members, and tokenomics before investing.
  • Diversify your investments: Don’t put all your eggs in one basket.
  • Never invest more than you can afford to lose: Crypto investments can be risky, so only invest what you’re willing to lose.
  • Engage with the crypto community: Join forums and social media groups to stay informed and get feedback from experienced investors.
  • Utilize portfolio tracking and risk management tools: Keep track of your investments and set alerts to monitor price fluctuations. Use risk management tools like stop-loss orders to minimize potential losses in case of sudden market drops.
  • Look for endorsements and partnerships: Projects with strong partnerships and endorsements from well-established companies or industry leaders can provide additional credibility. These collaborations can be an indicator of the project’s potential for growth and legitimacy.
  • Examine liquidity and lock-up periods: Ensure the project has enough liquidity for trading and if tokens are locked by the team or early investors. Adequate liquidity and lock-up periods can reduce the likelihood of a rug pull, as developers and early investors are committed to the project’s long-term success.


Investor awareness is critical in the ever-evolving landscape of cryptocurrencies. By staying vigilant, recognizing red flags, and taking steps to safeguard your investments, you can minimize the risk of falling victim to crypto rug pulls.

FAQs About Crypto Rug Pulls

Q: Are certain types of projects or cryptocurrencies more susceptible to rug pulls than others?

A: Projects with anonymous teams, unclear use cases, unrealistic tokenomics, and a lack of project roadmap are more susceptible to rug pulls. Newer and smaller projects in the DeFi and NFT space may also be more vulnerable due to the rapidly evolving nature of these sectors and the potential for higher returns, which attracts scammers.

Q: Can I recover my funds if I become a victim of a crypto rug pull, and what are the steps to do so?

A: Recovering funds from a crypto rug pull can be challenging, as transactions are often irreversible. However, you can report the incident to law enforcement and regulatory authorities who might be able to investigate and potentially recover some funds. It is essential to keep all relevant documentation and transaction records to support your case.

Q: What strategies can I employ to minimize my exposure to the risks associated with crypto rug pulls?

A: To minimize your exposure to crypto rug pull risks, conduct thorough due diligence, diversify your investments, never invest more than you can afford to lose, and engage with the crypto community. Utilize portfolio tracking and risk management tools, look for endorsements and partnerships, and investigate liquidity provisions and lock-up periods for added protection.

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