In the cryptocurrency world, a “rug pull” scam is when a team or developer stops supporting a project, leaving investors with worthless tokens. These types of scams are common in the decentralized finance (DeFi) space, as there is no regulatory mechanism to oversee the operation of projects.

It’s important to look out for certain signs to recognize a rug pull: unknown developers, no liquidity lock, limits on sell orders, sudden price swings, and promises of extremely high returns. It’s also a critical step to check if the projects have been audited externally.

Examples include big scams like OneCoin, Squid Game, and AnubisDAO. These projects created a huge buzz to attract investors, but eventually the developers took the money and disappeared.

Rug pull scams are illegal in the cryptocurrency world, and regulators around the world are cracking down on such activities. However, due to their decentralized and anonymous nature, they continue to be a challenge for law enforcement.

How do you protect yourself from rug pull scams? Share in the comments!