Rug pull

Extracted Attributes

• Type

  Confidence trick

• Category

  Fraud

• Sub-type

  Soft rug pull (gradual exit, marketing hype, pump-and-dump)

• Mechanism

  Originators abscond with funds

• Consequence

  Loss of investment

• Primary Context

  Cryptocurrency

• Secondary Contexts

  Online selling, Darknet markets

• Key Characteristic (Crypto)

  Promise of high returns

• Legal Status (Hard Rug Pull)

  Illegal

• Legal Status (Soft Rug Pull)

  Unethical, not always illegal

Exit scam

An exit scam or rug pull is a confidence trick or fraud, perpetuated under the guise of a legitimate business, that ends when the originator absconds with the funds contributed by participants. When a business entity pulls the rug and stops shipping orders while receiving payment for new orders, it could take some time before it is widely recognized that orders are not shipping. The entity can then make off with the money paid for unshipped orders. Customers who trusted the business do not realize that orders are not being fulfilled until the business has already disappeared. Exit scams are commonly associated with the rise of cryptocurrency projects due to the lack of regulation and decentralized ecosystem. The best-known examples are online sellers where the buyer does not know the real identity or physical location of the scammer and therefore has little recourse. Payments to darknet markets are usually made in cryptocurrencies such as Bitcoin or Monero, where payments are irreversible and cannot be recovered through a chargeback. Exit scams are frequently perpetrated on illegal darknet markets. While the most common such schemes are perpetrated by individual vendors who receive payment for the product they have no intention of shipping, such scams have also been perpetrated both by individual procurers who obtain the product which they have no intention of paying for, and by operators or administrators of these markets who, by shutting down an entire market, can abscond with whatever currency the market was holding on behalf of buyers and sellers in escrow at the time of the shutdown. Regardless of who is perpetrating the scam, if the cheated parties are themselves knowingly participating in illegal activities, it is not usually a viable option to notify law enforcement.

Web Search Results

• Rug Pull Scams - DataVisor

  A rug pull is a cryptocurrency investment scam where the creators or developers of a cryptocurrency project suddenly abandon the project or exit scam, taking all the funds invested by users with them. The name originates from the idea of pulling the rug out from under investors' feet, leaving them with worthless tokens or losing their investments entirely. Rug pulls typically occur in projects that lack transparency, have anonymous developers, or promise high returns with little to no substance [...] A hard rug pull happens when a project's developers or administrators completely and suddenly disappear, taking all the funds invested in the project with them. The project's website, social media channels, and any other communication channels are taken down, leaving investors with a way to contact or locate the perpetrators. Hard rug pulls often leave investors with no chance of recovering their funds.A soft rug pull involves a more gradual or subtle exit strategy. The project's administrators [...] behind them.Being "rug pulled" or “rugged” means falling victim to a rug pull scam. This term can apply to both the victims of a rug pull scam and the actual investment scam itself.

• What Is A Rug Pull? | Bankrate

  A rug pull is a scam where a cryptocurrency or NFT developer hypes a project to attract investor money, only to suddenly shut down or disappear, taking investor assets with them. The name comes from the idiom “to pull the rug out” from under someone, leaving the victim off-balance and scrambling. [...] Rug pulls can be considered either hard or soft. A hard rug pull is when a developer has no intention of ever completing a project and intends to scam investors from the start, such as “hardwiring” a project’s code to leave an avenue open for theft. In contrast, a soft rug pull typically doesn’t have code-level fraud. Instead, soft pulls tend to rely on marketing hype to falsely inflate a project’s value, and then the project’s founders shut it down and run away with the money. Regardless, the [...] This type of soft rug pull is similar to penny stock pump-and-dump schemes. The developers of a project hype it up to draw investors and encourage trading activity, using marketing tools such as social media, sweepstakes and other incentives as well as private servers such as Discord to make a community around the project. After inflating a coin or NFT’s value, the developers rapidly sell off their own supply, tanking the token’s value. Investors are then stuck with mostly worthless assets.

• Exit scam - Wikipedia

  An exit scam or rug pull is a confidence trick or fraud, perpetuated under the guise of a legitimate business, that ends when the originator absconds with the funds contributed by participants. When a business entity pulls the rug and stops shipping orders while receiving payment for new orders, it could take some time before it is widely recognized that orders are not shipping. The entity can then make off with the money paid for unshipped orders. Customers who trusted the business do not [...] scam Swampland in Florida Tarmac scam Technical support scam Telemarketing fraud Thai tailor scam Thai zig zag scam Three-card monte Trojan horse "Trojan horse (business)") Wash trading White van speaker scam Work-at-home scheme | [...] allocation scam IRS impersonation scam Intellectual property scams Kansas City Shuffle Locksmith scam Long firm Medical quackery Mismarking Mock auction Moving scam Overpayment scam Patent safe Pig in a poke Pigeon drop Pork barrel Pump and dump Redemption/A4V schemes Reloading scam Return fraud Salting "Salting (confidence trick)") Shell game Sick baby hoax SIM swap scam Slavery reparations scam Spanish Prisoner SSA impersonation scam SSC Scam Strip search phone call

• What is a rug pull and how to avoid it? - Coinbase

  What is a rug pull and how to avoid it? | Coinbase =============== Image 1: Coinbase logo Sign up 1. Learn 2. Tips And Tutorials What is a rug pull and how to avoid it? ======================================= Image 2: What is a rug pull and how to avoid it? A rug pull is a scenario in the cryptocurrency world where developers abandon a project after raising assets, leaving participants with worthless tokens. [...] Rug pulls can occur in various forms, including liquidity pulls, fake projects, pump and dump schemes, and team exits. To avoid rug pulls, thorough research, security audits, community engagement, and awareness of warning signs are crucial. Understanding Rug Pulls ----------------------- A rug pull is a scenario in the cryptocurrency space. [...] It involves a team raising assets from the public by selling a token, only to abruptly shut down the project or disappear, taking the raised assets with them. This leaves the participants, or rather, their victims, with worthless tokens. Rug pulls can be extensively orchestrated, with bad actors leveraging various strategies to lure as many victims as possible. Some scams even use trusted figures to gain trust, while others promise extremely high returns or offer exclusive digital goods.

• Crypto Rug Pulls: Complete Guide - Koinly

  Koinly makes crypto tax simple.Try it free today. TLDR; Rug pulls are a common kind of exit scam. Bad faith actors launch projects, shill the token, and then disappear with investor funds. Common kinds of rug pulls include pump and dumps, liquidity pulls, and limiting sell orders. Red flags for rug pulls include extensive marketing, absent development plans, skyrocketing values, and unrealistic returns. [...] Some of the most recent rug pulls included the Squid Game rug pull, the Bored Bunny NFT rug pull, and the Luna Yield rug pull. Hard rug pulls are illegal. Soft rug pulls are unethical, but not illegal. If you realize your loss from a rug pull, you can claim a capital loss. You can offset your capital loss to reduce your tax bill. Disclaimer [...] was a yield aggregator on the Solana blockchain. Marketed as a legitimate project and aided by its association with other reputable projects like SolPad, Luna Yield attracted a lot of capital in its Initial Dex Offering (IDO) stage. Three days after its IDO launched, the funds raised were sent to Tornado Cash - an untraceable mixing service - and the website and all social media platforms shut down. It's estimated the founders made around $6.7 million from the rug pull.