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What is a Rug Pull? The Scam Draining Your Crypto Bag

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Ever heard someone say their investment ‘got rugged’? Here’s what actually happened.

A rug pull is when project devs ghost the community and yeet all the liquidity—leaving investors holding worthless bags. The name says it all: they literally pulled the rug out from under you.

How the scam works:

  1. The Setup: Project launches token on a DEX, hype builds, price pumps
  2. The Exit: Devs dump their holdings at peak price OR drain the liquidity pool
  3. The Rekt: Price crashes to near-zero, you can’t sell, funds are gone

Most rug pulls happen in DeFi—tokens on Uniswap, PancakeSwap, etc. Devs can exploit smart contract back doors or simply withdraw all paired liquidity in a single transaction.

Red flags to watch:

  • Anonymous team with no doxxing
  • No audit, code not verified
  • Promises of ‘1000x returns’
  • Liquidity pool isn’t locked or time-locked
  • Devs hold huge % of total supply

Bottom line: DYOR before buying any new DEX token. Sound projects have transparent teams, audited contracts, and locked liquidity. Chasing moonshot promises = asking to get rugged.

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
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