What Is a Rug Pull?

2026-09-10

A rug pull is a crypto exit scam: a project's creators attract investment, then suddenly pull out the value — draining liquidity or dumping their tokens — and disappear, leaving holders with worthless coins. This guide explains how they work and the red flags.

How a rug pull works

The pattern is always the same: build trust around a new token or project, attract buyers, then remove the value that made it attractive [1]. In a "hard" rug pull, malicious code or developer control is built in from the start — for example, the team holds the liquidity and withdraws it, or a hidden function blocks selling. In a "soft" rug pull, the team quietly abandons the project and sells its holdings over time [2].

Red flags to watch

Five signals recur across rug pulls, and each one lines up with a step the scam depends on. Liquidity that is not locked is liquidity the team can still withdraw; unaudited code can hide the function that blocks selling; a token you cannot sell is that function already at work; an anonymous team leaves no one to hold accountable after the exit; and a guaranteed return is what draws buyers in.

Rug pull red flags: anonymous team, unlocked liquidity, no code audit, inability to sell, and guaranteed-return promises.

How to protect yourself

Favor projects with audited code, locked or renounced liquidity, transparent and identifiable teams, and realistic claims. Be wary of anonymous teams, guaranteed-return promises, and tokens you cannot sell. If something feels engineered to rush you in, slow down (see our common crypto scams guide).

The bottom line

A rug pull is an exit scam where insiders remove the value holders relied on. Knowing the red flags — locked liquidity, audits, team transparency — is your best defense. To keep learning the fundamentals, follow more from Bitbase Academy.