If you have spent any time in crypto, you have likely seen this play out: a new token launches, the hype builds quickly, the price climbs, and then everything crashes. The website goes dark, social media goes silent, and investors are left wondering what just happened.
This type of crypto exit scam is known as a rug pull, and it has led to millions in losses across the crypto space. Rug pulls are not limited to any single blockchain or category. They have hit everything from meme coins to projects that appeared legitimate with polished websites and active communities.
In fact, a 2025 incident involving the RKC memecoin saw developers cash out over $600,000 within hours, crashing the token by more than 90%. Like other common crypto scams, rug pulls thrive on trust and urgency. Let us take a closer look at how they work and what you can do to avoid falling for one.
What Is a Rug Pull?
A rug pull is a type of scam where the creators of a cryptocurrency project suddenly withdraw liquidity or abandon the project, leaving investors with worthless tokens. It is like being invited to a group dinner, asked to split the bill upfront, and then watching the host disappear before anything arrives.
Rug pulls share some similarities with traditional pump-and-dump schemes, but they often use the tools of decentralized finance (DeFi) to execute the scam. These incidents started becoming more common during the DeFi boom of 2020, when launching a token on a decentralized exchange (DEX) became fast, easy, and largely unregulated. With minimal checks in place, bad actors found ways to exploit the system and take advantage of unsuspecting investors.