Imagine waking up to find that the crypto token you bought last night is now worth zero. The website is gone. The developers vanished. Your money? Stolen. That’s a rug pull—a scam that has been draining billions of crypto wallets on web3.
While crypto scams have existed for years, rug pulls, as we know them today, emerged in 2017–2018, coinciding with the rise of decentralized finance (DeFi) and initial token offerings (ITOs).
These scams thrive in the unregulated, decentralized nature of the market, causing significant financial damage. As crypto models evolve, so do scam tactics, making vigilance more crucial than ever.
Before jumping into the next big token, ask yourself: is it built to last or just another trap? Stay sharp!
This guide will empower you to spot rug pulls in crypto before they happen, to secure your assets, and take decisive action to avoid costly crypto scams.
What is a Rug Pull?
A rug pull is a deceptive exit scam where developers create a cryptocurrency, generate massive hype, attract buyers, and then abruptly drain liquidity or abandon the project, leaving participants with worthless tokens.
It’s a carefully orchestrated illusion—one moment, the opportunity seems golden; the next, the project vanishes into thin air, along with everyone’s funds.
Rug pulls have surged in recent years because launching tokens is easier than ever. DeFi and meme coins—driven by hype rather than real value—have become the perfect playground for scammers.
With little to no oversight, scammers can fabricate an enticing narrative, pull in unsuspecting participants, and disappear, making rug pulls one of the most devastating scams in the crypto world today. This 2024 SlowMist Report chart
By 2024, rug pulls reached new record levels. The crypto industry saw 410 security breaches, resulting in $2.013 billion in losses, with DeFi platforms being the primary target, over the last year, according to the SlowMist Blockchain Security and AML Annual Report.
While this marks a 19.02% decrease from 2023’s $2.486 billion in losses across 464 incidents, it underscores the persistent vulnerabilities in the blockchain space.
Why Influencers are Fueling Rug Pulls
In recent years, a disturbing trend has taken over the crypto space. Influencers promoting scam tokens to their massive audiences.
Many social media personalities, celebrities, and self-proclaimed crypto experts have leveraged their platforms to hype up new tokens, often in exchange for undisclosed financial incentives.
How Influencers Exploit Their Followers
Scammers leverage social media reach to create hype-driven rug pulls, deceiving thousands in the process, claiming:
- Undisclosed Paid Promotions – Many influencers secretly accept payments to promote tokens, making them seem legitimate.
- Fake Urgency & “Limited-Time Opportunities” – They push FOMO-driven narratives to pressure followers into quick decisions.
- Pump & Dump Tactics – Once enough people buy in, they sell their holdings at a peak, crashing the price and leaving their audience with worthless tokens.
The Real Cost: What Happens to Their Followers?
- Millions Lost in Scams – Victims of CryptoZoo, Save The Kids, and other influencer-backed rug pulls lost significant funds.
- No Legal Accountability – Many influencers face no consequences, leaving victims with no recourse.
- Regulatory Crackdowns Are Growing – Authorities like the SEC are increasing scrutiny, but enforcement remains inconsistent.
While there’s no comprehensive regulation protecting participants from influencer-driven scams, staying vigilant is the best defense.
Avoid FOMO, question projects aggressively promoted by celebrities, and always research before putting money into any token.
Scammers thrive on hype—don’t let them profit off your trust.
How Do Rug Pulls Work?
Rug pulls typically follow a structured pattern
It always starts with a ‘game-changing’ new crypto project.
- The website looks great. Influencers are promoting it.
- People are buying in.
- The price surges. But then…
Boom.
- The liquidity pool is drained. Holders realize they can’t sell.
- Social media accounts disappear.
- The developers? Gone.
It’s a textbook rug pull!
Historical Rug Pulls in Crypto
The Squid Game Token Rug Pull (2021)
What Happened?
The developers falsely claimed that SQUID was an official token tied to the Netflix series, generating enormous buzz. The token launched in October 2021 and quickly went viral.
The developers drained the liquidity pool and disappeared, crashing the token from $2,861 to nearly $0 in minutes, leaving thousands of buyers stranded.
Lesson Learned
A viral name doesn’t mean a project is real. Always check if a token is officially licensed and avoid projects that prevent selling through smart contract restrictions.
As thousands watched live on Twitch, the price of Squid Game Token (SQUID) skyrocketed only to collapse within minutes, leaving viewers stunned as their investments vanished in real time.
Pump.fun & Gen Z Quant Rug Pull (2024)
What Happened
A teenage developer launched a meme coin on Pump.fun platform, hyped it on social media, and live-streamed his own sell-off, triggering a 54% price crash within seconds.
Lesson Learned
If a token is driven by influencer hype, assume the worst. Always check holder distribution—if insiders hold most of the supply, they can crash the price instantly.
ZKasino Rug Pull (April 2024)
What Happened
The ZKasino scam was the largest rug pull of 2024, according to a SlowMist report. Users bridged Ethereum (ETH) into ZKasino expecting staking rewards, but the developers changed withdrawal terms, locking funds and stealing $33 million.
Lesson Learned
If a project controls your withdrawals, it controls your funds. Never trust platforms that suddenly change their terms after you’ve deposited assets.
AnubisDAO Rug Pull (October 2021)
What Happened?
The AnubisDAO rug pull was a DeFi scam that stole $60 million from participants in less than 24 hours. Marketed as a dog-themed OlympusDAO fork, AnubisDAO capitalized on the meme coin craze but turned out to be a sophisticated exit scam, transferring all funds to a private wallet, erasing its social media presence overnight.
Lesson Learned
If a project rushes fundraising with no audits or transparency, it’s a red flag. Avoid anonymous teams and never participate in token sales without security checks.
How to Protect Yourself from Rug Pull Scams
Rug pulls thrive on hype, FOMO, and lack of transparency, but you don’t have to be the next victim.
By following these key security practices, you can spot red flags, protect your assets, and make smarter decisions in the crypto space.
Research the Project Thoroughly
- Check the Team – Are the developers publicly known or completely anonymous? Anonymous teams pose a higher risk.
- Audit the Smart Contract – Legitimate projects undergo third-party security audits. If there’s no audit, proceed with caution.
- Verify the Whitepaper & Roadmap – Scams often lack clear documentation or provide vague, recycled promises.
Analyze the Token & Liquidity
- Look for Liquidity Locks – A project should lock liquidity for months or years, preventing developers from draining funds.
- Check Holder Distribution – If a few wallets hold 80%+ of the token supply, it’s a major red flag for a future rug pull.
- Watch Trading Activity – If most transactions are from insiders, it’s likely a setup for a pump-and-dump.
Avoid Influencer Hype & FOMO
- Be Skeptical of Celebrity & Influencer Endorsements – Many influencers are paid to promote tokens without disclosing conflicts of interest.
- Don’t Chase “Too Good to Be True” Gains – If a project promises guaranteed returns or massive profits overnight, it’s a scam.
- Look for Community & Transparency – Scammers disable comments or delete social media accounts before they vanish.
Use Trusted Platforms & Security Measures
- Stick to Reputable DEXs & CEXs – Avoid obscure platforms with no security audits.
- Enable Multi-Factor Authentication (MFA) – Secure your exchange accounts with extra verification layers.
- Use a Hardware Wallet – Keep your holdings in cold storage for maximum security.
Test Before Committing
- Start Small – Avoid risking large amounts on a new project.
- Check If You Can Sell – Some rug pulls block selling while allowing only insiders to withdraw.
- Monitor Updates – If the project suddenly stops communicating, that’s a red flag.
Stay Vigilant, Stay Safe
Rug pulls are a major threat, draining billions in 2024 alone. Scammers exploit hype, FOMO, and weak security to steal funds. Protect yourself by staying cautious:
- Check for Red Flags – Is liquidity locked? Who controls the tokens? Is there an audit?
- Be Careful When Connecting Wallets – Never sign unknown smart contracts or grant unlimited spending permissions.
- Double-Check Before Transferring Funds – Avoid projects with sudden rule changes or withdrawal restrictions.
- Use a Secure, Self-Custodial Wallet – Klever Wallet keeps you in control of your private keys.
Final Rule: If a project relies on urgency, influencer hype, or lacks transparency, it’s a red flag.
If it feels suspicious, it probably is.
Think before you connect, verify before you send, and always stay in control
Stay Safe, Stay Klever!
