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What is a rug pull and why you should avoid them

A rug pull is a type of exit scam in which a fraudulent project team absconds with investors’ funds. This is done by either withdrawing all of the funds from the project’s cryptocurrency wallets or by shutting down the project and refusing to refund investors.

Rug pulls are often difficult to spot, as the team will often continue to promote the project and act as if everything is normal until they make their move. However, there are some red flags that can indicate that a rug pull may be imminent, such as the team suddenly becoming evasive when asked about the project’s finances or the sudden disappearance of key team members.

Investors can protect themselves from rug pulls by doing their due diligence on a project before investing, and by monitoring the project closely for any red flags. If a rug pull does occur, investors may be able to recover their funds if they act quickly to try to track down the team’s wallets or to contact exchanges to freeze the project’s assets.