What Is Rug Pull? A Comprehensive Analysis of Crypto Scams and Notable Cases

In the wild world of Crypto Assets, Rug Pull has become one of the most feared eyewash by investors. Simply put, it refers to the behavior of project developers suddenly abandoning the project and absconding with funds, causing the token value to plummet to zero in an instant – just like the carpet being abruptly pulled from underfoot, leaving investors crashing down unexpectedly.

Data from 2025 shows that while such incidents decreased by 66% year-on-year (from 21 cases in the same period of 2024 to 7 cases), the destructive power per incident has surged — losses within the year reached as high as $6 billion, far exceeding the $9 million in the same period of 2024. Scammers’ methods are becoming more covert and professional.

The operation mechanism and types of Rug Pull

Rug Pull is not a singular tactic, but rather a meticulously designed systematic eyewash. At its core, it exploits investors’ desire for high returns, combining the anonymity of Crypto Assets with technical complexity to carry out theft.

• Hard Pull: Developers preset backdoors in the smart contract, suddenly withdrawing liquidity funds or preventing ordinary users from selling through “honey pot vulnerabilities,” only allowing themselves to sell the tokens. Such eyewash often results in asset value dropping to zero within minutes.
• Soft Pull: The team gradually abandons project operations, stops updating the code and roadmap, allowing the token to slowly “bleed” to death. Investors miss the opportunity to withdraw due to holding onto illusions.
• Liquidity extraction: Maliciously removing liquidity pool funds from decentralized exchanges, making tokens unable to trade and causing price crashes.
• Pump and Dump: After raising the price through celebrity endorsements or false narratives, the project party sells off all holdings to profit, triggering panic selling.

Classic Case: The “Carpet Disappearance Technique” that Devoured Hundreds of Millions of Dollars

In the history of Crypto Assets, several sensational Rug Pulls not only siphoned off huge amounts of funds but also exposed regulatory blind spots in the industry.

1. Squid Coin (SQUID): Launched in 2021 amidst the popularity of Netflix’s hit show “Squid Game.” The project embedded a “honey pot vulnerability,” preventing ordinary investors from selling their tokens, only allowing developers to dump them. At its peak market cap, it attracted $3.36 million in funds, and after the project team liquidated, the price plummeted by 99.99%, leaving investors with nothing.
2. Evolved Apes: A landmark eyewash in the NFT field. The anonymous founder “Evil Ape” claimed to develop a fighting game based on 10,000 NFTs, but disappeared a week later with 798 ETH (worth $2.7 million at the time), and all social media accounts were shut down. The artists involved in the creation received no compensation.
3. Mantra’s OM token crash (2025): Although the founder denies the Rug Pull, this incident resulted in a loss of $5.5 billion (accounting for 92% of the total Rug Pull losses in 2025). The token experienced liquidity depletion in a short period, triggering a chain sell-off.
4. LIBRA Token: In February 2025, after Argentine President Javier Milei mentioned the project on the X platform, its Solana The on-chain token LIBRA’s market value soared to 4.56 billion USD. After the president deleted the post, the price plummeted over 94% within 24 hours, widely accused of being an eyewash.

Survival Guide: Key Strategies to Identify and Avoid Rug Pulls

In the face of increasingly complex eyewash, investors need to enhance their defenses by combining technical tools with behavioral analysis.

• Verify project transparency: Be wary of anonymous teams, unverified smart contracts, and projects with zero updates on GitHub. Audit reports (such as CertiK) are a basic threshold, but the authenticity of the auditing agency must be verified.
• Beware of abnormal data indicators: If a project shows “a sudden surge in the number of unique active wallets” or “high trading volume accompanied by low user activity”, it may indicate eyeglass and manipulation.
• Identifying marketing bubbles: Projects that overly rely on celebrity endorsements, promise “risk-free high returns,” or use FOMO (fear of missing out) tactics to pressure investments are extremely high risk.
• Liquidity Lock Mechanism: Reliable projects will lock liquidity through liquidity pools (such as 12-24 months) or destroy LP tokens to prove fund security. Tokens with unlocked liquidity are like bombs that can be detonated at any time.

The crypto world is a mix of innovation and risk. Rug Pull eyewash has never disappeared, it has just evolved to be more covert. The 2025 Mantra and Libertad incidents prove that even with celebrity endorsements or impressive data, if there is a lack of on-chain transparency and liquidity guarantees, danger still lurks.

The only shield for investors is “DYOR” (Do Your Own Research). Replace emotional following with code verification, and prove resistance to the temptation of high profits with lock-up. After all, on the blockchain, trust should always be built on verifiable algorithms, rather than on compelling narratives.