Crypto Rug Pull Checker
But unless you have tons of money sitting around to throw away, it’s best to stay on the platform you trust. A legitimate crypto often has at least tens of millions of dollars in its network, even if it’s not one of the most popular. Not to mention they usually have a fair amount of tokens locked in for certain durations.
Another way to pull the rug is by disabling buyers’ ability to sell. Malicious actors can add code to their token’s smart contract, which doesn’t allow users to sell back their tokens on DEXs. Knowing the signs of a potential rug pull can save you a lot of financial dilemmas. Unless you’re an experienced trader who’s spent years in the game, avoid venturing too deep into the DEX space.
While it’s not unheard of for people to use pseudonyms in cryptocurrency, reputable developers often have websites and references that can establish their credentials. Investors can protect themselves by choosing established cryptocurrency projects, making sure the code of any new project has been reviewed and verifying the developers' identities. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. Popular instances include the Squid game crypto fraud, in which the founders inflated its currency and then vanished with $3 million in investor funds. The value of a coin may climb in hours, signaling a possible rug pull.
This should provide some comfort to the victims of crytpo scams such as rug pulls. For those not prepared to invest in DEX-based coins, trusted cryptocurrency platforms conduct a thorough vetting process before hosting any coins on their platform. While risks do still exist, some relief can be taken from the fact that some of the due diligence has been undertaken for you. Recent news has again drawn attention to the world of cryptocurrency as fraudsters exploit unwitting investors looking for the next astronomically high returning altcoin.
Another indicator that a project is unruggable is if the team relinquishes custody of any tokens received during a presale. Bitcoin stays in the headlines when prices continue to fall and rise weekly. Developers who prefer hiding behind pseudonyms might be planning to evade legal follow-ups once they have fleeced investors. In the same year, Faruk Fatih Özer, the founder of Thodex, fled to Albania with an estimated two billion dollars in customer funds after the DEX was suddenly closed in April. Their customer base of 390,000 people is the reason they were able to get away with so much money. Social media and crypto influencers may have a significant impact on the enthusiasm surrounding a token or cryptocurrency.
Rug pull is one of the most common crimes in the field of DeFi, and it affects both individuals and businesses. Here’s everything you need to know about rug pulls, including how to stay safe. Another way to think about an unruggable project is if the team renounces ownership of any tokens, like tokens they would have acquired during a presale. The world operates like any other business whose values grow based on demand and supply. Therefore, in case a project grows in value out of nowhere, there is a likelihood of some few traders trying to use the FOMO tactic to lure investors.
If the white paper is written in an ambiguous and unclear manner, it is often a red flag that it might potentially be an exit scam. An external audit is an indicator of the smart contract soundness, but not necessarily of the project’s soundness. A rug pull happens when a developer creates a cryptocurrency token with the intent to run away with investors' funds. Within the context of the cryptocurrency industry, phishing scams target information pertaining to online wallets. Specifically, scammers are interested in crypto wallet private keys, which are the keys required to access cryptocurrency.
This type of rug pull exploits the way modern crypto tokens are coded. These tokens are programmed with “smart contractsâ€, which can perform actions automatically without human intervention. It’s this SquidGame very same functionality that forms the foundation of the entire DeFi ecosystem. Rug pulls are usually very well planned and blatantly executed.