<p>While the cryptocurrency field draws some really bright minds, it also attracts more than its fair share of scammers. One of the most well-known scams perpetrated by these con artists is the infamous "rug pull." "What are crypto rug pulls?" and "how can you prevent getting it?" are two often asked questions among novice investors. As a result, don't miss this article at <a href="https://www.builder.news/" alt="Builder.news" title="Builder.news" target="_blank" rel="" class="">Builder.news</a> to get an answer for them.</p><h2>What is a rug pull in crypto and how to spot</h2><p class="prosemirror-p-center"><img src="https://lh6.googleusercontent.com/RCuNV3nQh6hyyYpJ1yLwNjbV_1p2cdGKaHLRH1qNqGADoOhFWpuzyuPDRp_pE3lL-f5b2F-LhFTOqujMt_aJN_UtBjc1psHvmEuF653Eo0_nCjYci4sIfVNIkg3XeG_xkVdGSYvxEPgCsAbMRw" alt="What is a rug pull in crypto and how to spot" title="What is a rug pull in crypto and how to spot" width="624" height="351"></p><h3>Definition of rug pull in crypto</h3><p dir="ltr">A <strong>rug pull</strong> is a new sort of cryptocurrency scam. The phrase "pulling the rug out" inspired the name. It works like this: a developer attracts investors to new cryptocurrency ventures, then withdraws before the product is built. As a result, the investors are left with a useless currency.</p><p dir="ltr">It's not just a crypto phenomenon. However, cryptocurrency is particularly vulnerable.&nbsp;</p><p dir="ltr">Cryptocurrency projects frequently employ "smart contracts," which are agreements governed by computer software rather than the judicial system. It gives you little leeway if things don't work out. Rug pulls are particularly popular in DeFi efforts that try to disrupt industries such as banking and insurance. Rug pulls have also included NFTs, or non-fungible tokens, which grant digital ownership of paintings and other assets.</p><h3>Types of rug pulls in crypto</h3><p dir="ltr">In cryptocurrency, there are three sorts of rug pulls: liquidity stealing, limiting sell orders, and dumping.</p><h4>Liquidity stealing</h4><p dir="ltr">When token producers remove all coins from the liquidity pool, this is referred to as liquidity stealing. This destroys all of the value that investors have infused into the currency, pushing its price to zero. These "liquidity pulls" are most common in DeFi situations. The most typical exit scam is a DeFi rug pull.</p><h4>Limiting sell orders</h4><p dir="ltr">Limiting sell orders is a sneaky approach for a bad developer to cheat investors. In this case, the developers program the tokens so that they are the only ones who can sell them. Developers then wait for retail investors to invest in their new cryptocurrency using matched currencies. Paired currencies are two currencies that have been traded against each other. When there is enough positive price activity, they exit their holdings, leaving behind a worthless token.</p><h4>Dumping</h4><p dir="ltr">Dumping occurs when developers sell their own huge number of tokens quickly. This lowers the coin's value and leaves remaining investors with useless tokens. Dumping frequently happens after a lot of advertising on social media networks. The resultant price increase and sell-off is referred to as a Pump-and-Dump Scheme. Dumping is more ethnically ambiguous than other DeFi rug pull schemes. It is not unethical for crypto developers to buy and sell their own currency in general. When it comes to DeFi cryptocurrency rug pulling, "dumping" refers to how much and how quickly a coin is dumped.</p><h3>Crypto rug pull examples</h3><p dir="ltr">Rug pull cryptocurrency scams cost an estimated $7.7 billion from investors in 2021. These investors believed they were investing in genuine projects, only to have the rug yanked out from under them. Here is a rug pull crypto list:</p><h4>Biggest rug pull crypto</h4><h5>OneCoin</h5><p class="prosemirror-p-center"><img src="https://lh5.googleusercontent.com/ew3kynk-3cGb-tuOPBHhkSBEbWwPFtb4O9RiUpEszhFBphbwQh6s1Qjg-oJGeggLN2zK5z5jvOrC_KzeI20vBa1K9i7PdacXgSn2yR2kAJdo1-3qRd3vKbR8DHlnxsxn-QtQVVZytDRyCd9WcQ" alt="Biggest rug pull crypto" title="Biggest rug pull crypto" width="624" height="340"></p><p dir="ltr">Dr. Ruja Ignatova founded OneCoin in late 2014, and its promotional materials positioned it as the next big cryptocurrency and a "better Bitcoin." OneCoin did grow in popularity; at the time of Ms. Ignatova's performance at Wembley, its market capitalization was more than half that of Bitcoin. It was, however, not a better Bitcoin, but a massive Ponzi fraud concealed under certain multi-level marketing (MLM) strategies.</p><p dir="ltr">OneCoins, which would ultimately enter the market and change global payments, could be mined by buyers. But, in actuality, OneCoin was never worth anything. The alleged blockchain underlying the currencies never existed (more on that later). Users' mined coins could never be traded outside of the website.</p><p dir="ltr">OneCoin makes money by selling instructional materials and marketing its coin. The OneCoin scam is suspected of stealing between $4 and $15 billion from users.</p><p dir="ltr">The OneCoin hoax grew so large that numerous central banks, including the Croatian National Bank in 2017 and the central banks of Latvia, Sweden, and Norway in 2016, issued warnings against investing in it. OneCoin was handed a cease and desist order by Germany's Federal Financial Supervisory Authority in 2017. Ruja Ignatova vanished the same year.</p><p dir="ltr">In January 2018, Bulgarian police raided OneCoin's offices in Sofia, Bulgaria. Sebastian Greenwood, Ms. Ignatova's co-founder, and her brother Konstantin Ignatov were jailed in 2018 and 2019, respectively. OneCoin ceased to exist in 2019, however, litigation and investigations are still ongoing.</p><h5>SnowDog</h5><p class="prosemirror-p-center"><img src="https://lh6.googleusercontent.com/KEw-nZAIGJd41yBebS-DaPugkaKSzjnZhgUEUXVSSAJAoH5JV2HKD48IugwrgJs1FmLtM78fDqJGMV_zMy7N_e5qxR08FmjbbtEFYBZHsKnoZbkwgNe5zfEXGcOAPnaTVMI2U-0-gpfv9UtxKA" alt="Biggest rug pull crypto" title="Biggest rug pull crypto" width="624" height="367"></p><p dir="ltr">SnowDogDAO was a project with the lofty goal of becoming the crypto space's reserve currency. With Snowbank working well, most individuals in SnowDog thought it was a worthwhile endeavor, mostly because the Snowbank creators stood to benefit more if the project thrived than if it perished.</p><p dir="ltr">Regardless, confusion ensued on the day of the repurchase when it was disclosed that the buyback would only be done on a special SnowDog AMM (Automated Market Maker), rather than Trader Joe, the decentralized exchange that most had previously used to buy $SDOG.</p><p dir="ltr">When $SDOG owners eventually gained access to the password-protected AMM, they were greeted with a stinging dump. Two whale wallets had already surpassed everyone else, with one selling 187 $SDOG for US$10 million, or $54,000 each coin.</p><p dir="ltr">While most $SDOG holders expected that they would not be the first to sell their $SDOG tokens, the true irritation came later when the community discovered that the wallets that dumped their tokens were able to do so before the AMM's password security was removed.</p><p dir="ltr">Furthermore, the $SDOG contract on the Trader Joe platform had never approved these wallet addresses. The authorization should have been granted if the team had no prior insider information. All of this suggests that the SnowDog was a rug pull.</p><h5>Uranium Finance</h5><p class="prosemirror-p-center"><img src="https://lh4.googleusercontent.com/zKyybd8L5gFXFgzxenmOw-lbkrFDotD9XitzbY9HX-Tb_LcrVE8WmZsma2FhZtDBc1vP9S7mc3VcVFF4z5UscUWg88U_BW0vv8IxDdy155fFeB2EUsu2EX1-1DTtT-DLQJX1mURCl4CTQihkeg" alt="Biggest rug pull crypto" title="Biggest rug pull crypto" width="624" height="351"></p><p dir="ltr">Uranium Finance announced on Twitter in April 2021 that $50 million in investor cash had been stolen. However, it appeared that this was not the case, but rather another clean sweep of investors' funds.</p><p dir="ltr">Uranium Finance, a Binance Smart Chain-based decentralized finance (DeFi) firm, said on April 28, 2021, that it was hacked and lost $50 million as a result. The Uranium protocol, according to Igor Igamberdiev of The Block Research, was drained of various tokens, including bitcoin and ether.</p><h4>The latest crypto rug pull reported</h4><h5>Squid game&nbsp;</h5><p class="prosemirror-p-center"><img src="https://lh4.googleusercontent.com/I584q8dcp3q0AEGIitCFSeqQQZQtbI7kVKVpXhn29FaT3kpWpqTWe9Nv8dWrOmv3uiWFP21e1pCy5FvIA1cJXeguOqEyzWrXpNTPBIq-E6bt_E31hEgeZaSNppxe55jmilp_s9nlWR_gpWo1xw" alt="The latest crypto rug pull reported" title="The latest crypto rug pull reported" width="624" height="351"></p><p dir="ltr">Squid game rug pull is the most recent and largest rug pull in crypto history. The Squid token was a play-to-earn token based on the Netflix smash TV show Squid Game. The token increased by more than 33,600 percent from a cent to $3.36 in the first few weeks after its launch.</p><p dir="ltr">The token's phenomenal increase eventually reached $2861, when it abruptly vanished. Someone had dismantled the Squid token, and its promoters had vanished. By this point, over 43,000 investors had invested in the coin.</p><p dir="ltr">The coin is currently valued at $0.003028. Simultaneously, investors have learned they cannot sell their tokens. The developers of the project installed an anti-dumping mechanism, which meant that no one could sell tokens from Uniswap's decentralized exchange. There is no hope that the investors' money will ever be recovered.</p><h5>Luna Yield</h5><p class="prosemirror-p-center"><img src="https://lh5.googleusercontent.com/WNgEHypop-ZOTVp46JNW3jhz-mWafotXmXHgkhSrLJcosscVuPztUdisBXderxNvm2gm5HVaKHK6QRLcpmXftOE_TNUuQGmQ1pQ4FcWeqcXj592IopJhvRquYyBRi0JC3cgufC6zf6uxcwun0w" alt="The latest crypto rug pull reported" title="The latest crypto rug pull reported" width="624" height="416"></p><p dir="ltr">Luna Yield was a Solana (SOL) platform-based ecological liquidity farming initiative. Before Luna Yield collapsed, the SOL project had surpassed $2 billion in total locked value (TVL). The project's developers abruptly destroyed their website, Telegram, and Twitter accounts, as well as nearly $10 million in cash.</p><p dir="ltr">Following the deactivation of the social media profiles, Luna Yield investors attempted but failed to withdraw their unstaked funds due to the pool's negative balance. Following the additional inquiry, the Luna Yield community discovered that the address of the project's developer had approved the transactions that led to the rug pull.</p><h2>How to spot from rug pull crypto</h2><p class="prosemirror-p-center"><img src="https://lh6.googleusercontent.com/lDh-nHM_V0KGFmNrKTzhk-1L3oJvOvbWEDIvY5PS4TwXQVKTlZX8xFtQHUNCyPakTwI8AG3W8EkdzMGgR-q8sm49ljy-L7XFTAz80Ju5daCC5kR5HDozi6ekI2aoU2m7FyjCxIUCdbxPiKNXmQ" alt="How to spot from rug pull crypto" title="How to spot from rug pull crypto" width="624" height="351"></p><p dir="ltr">Being aware of the warning signals is the greatest strategy to avoid rug pulls. While the "it's too good to be true" rule applies to all investments, there are a few particular warning flags to look out for in order to recognize dangerous rug pulls and avoid being a victim. The idea is to take a step back at an exciting period to examine reality without <a href="https://www.builder.news/earn/how-to-avoid-fomo-and-stay-loyal-to-a-trading-strategy-C4PbP" alt="How to avoid FOMO and stay loyal to a trading strategy" title="How to avoid FOMO and stay loyal to a trading strategy" target="_blank" rel="" class="">FOMO</a>. The following are six indicators that users should be on the lookout for in order to safeguard their money against crypto rug pulls and become a rug pull crypto checker.</p><h3>Developers who are unknown or anonymous</h3><p dir="ltr">Investors should take into account the credibility of the persons behind new cryptocurrency initiatives. Are the creators and promoters well-known in the crypto world? How long have they been in business? If the development team has been doxxed but isn't well-known, do they still look legitimate and capable of following through on their promises?</p><p dir="ltr">Investors should be wary of fresh, readily fabricated social media accounts and identities. The quality of the project's white paper, website, and other media should provide hints about its general validity.</p><h3>There is no frozen liquidity</h3><p dir="ltr">One of the simplest methods to tell the difference between a scam coin and a legal cryptocurrency is to see if the currency is liquidity locked. With no liquidity lock in place on the token supply, nothing prevents the project developers from stealing the whole liquidity.</p><p dir="ltr">Liquidity is ensured through time-locked smart contracts, which should endure three to five years after the token's first issuance. While developers can write their own time locks, third-party lockers can give more security.</p><p dir="ltr">Investors should also look at how much of the liquidity pool has been locked up. A lock is only useful in proportion to the quantity of liquidity it protects. This amount, known as total value locked (TVL), should be between 80 and 100 percent.</p><h3>Sell order restrictions</h3><p dir="ltr">A malicious actor can program a token to limit the ability of certain investors to sell but not others. These selling limits are typical of a sham project.</p><p dir="ltr">Because selling limitations are hidden in code, determining if there is fraudulent behavior can be difficult. One method to test this is to buy a small quantity of the new coin and then immediately try to sell it. If there are difficulties in dumping what was just acquired, the endeavor is most certainly a hoax.</p><h3>Price movement is skyrocketing due to a scarcity of token holders</h3><p dir="ltr">Sudden huge price fluctuations for a new coin should be treated with care. Unfortunately, this is true if the token has no locked liquidity. Significant price increases in new DeFi coins are frequent indicators of the "pump" before the "dump."</p><p dir="ltr">Investors that are concerned about the price fluctuation of a currency might utilize a block explorer to determine the number of coin holders. Because of the token's tiny number of holders, it is vulnerable to price manipulation. A tiny group of token holders might potentially indicate that a few whales are about to dump their positions, causing substantial and rapid harm to the coin's value.</p><h3>Surprisingly high yields</h3><p dir="ltr">If something appears to be too good to be true, it most likely is. If the yields on a new coin appear suspiciously high but do not prove to be a rug pull, it is most certainly a Ponzi scam.</p><p dir="ltr">Although not always symptomatic of a scam, when tokens offer an annual percentage yield (APY) in the triple digits, these high rewards frequently translate to similarly significant risk.</p><h3>There is no external audit</h3><p dir="ltr">New cryptocurrencies must now go through a rigorous code audit procedure done by a respected third party. Tether (USDT) is a well-known example of a centralized stablecoin whose developers failed to disclose that it possessed non-fiat-backed assets. An audit is especially important for decentralized currencies, since auditing is required by default for DeFi projects.</p><p dir="ltr">Potential investors, on the other hand, should not simply accept a development team's word for it that an audit has taken place. The audit should be verifiable by a third party and demonstrate that no harmful code was discovered.</p><h2>How not to fall victim to rug pull crypto</h2><p dir="ltr">Investors can safeguard themselves by selecting established cryptocurrency projects, ensuring that any new project's code has been vetted, and verifying the developers' identity.</p><h3>Choose established products</h3><p dir="ltr">Looking at controlled exchanges like Binance, Coinbase, and FTX is one approach to locating established projects. While being listed on a major exchange is no guarantee of its quality or investment potential, these companies frequently analyze assets before listing them. The integrity of the project's computer code determines the fate of any investment in bitcoin or blockchain ventures. Check to check if it has been audited by a reputable professional group. If a project receives high marks, it will advertise.</p><h3>Understand the code</h3><p dir="ltr">The integrity of the project's computer code determines the fate of any investment in bitcoin or blockchain ventures. You don't have to be a computer programmer to understand how a product works before investing in it.</p><p dir="ltr">One approach to examining a possible investment without looking under the hood is to determine if it has been audited by a reputable professional group. Projects that have received high marks.</p><h3>Personal research</h3><p dir="ltr">Some of the most serious red flags in the cryptocurrency realm are caused by human causes. While it is fairly uncommon for people to use aliases in cryptocurrency, reputable developers frequently have websites and references that help confirm their credentials.</p><h2>Bottom lines</h2><p dir="ltr">Regardless of how widespread they are, money lost in crypto rug pulls is almost never recovered, and in most cases, the scammers are able to go without a trace.</p><p dir="ltr">The sense of wanting to grab onto the rug a little bit is the same whether it's your bothersome brother pulling your rug on a freezing winter morning or a crypto rug pull. We're sure you don't want to be awakened by your rug being pulled, so keep alert and cautious!</p><div class="pr-block-special"><strong>Disclaimer:</strong><br>This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

A rug pull is a hostile cryptocurrency industry action in which crypto engineers exit a project and steal investors' funds. Check it out below to know more about rug pull in crypto!

What is a rug pull in crypto and how to prevent to fall victim

ラグプルとは、クリプト開発者がプロジェクトから撤退し、投資家の資金を盗む敵対的な仮想通貨業界の行動です。クリプトでのラグプルについてもっと知りたい方は以下をチェックしてください！