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Rug pulls are one of the most damaging scams in the crypto world — and they’re becoming increasingly sophisticated. These schemes lure investors into promising projects before developers drain the funds and disappear, leaving holders with worthless tokens. Here’s how rug pulls work, the biggest examples in history, and how to spot one before it happens.
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What is a crypto rug pull?
A crypto rug pull is a scam where developers hype up a token or project, attract investor money and then suddenly withdraw the funds — leaving investors with worthless assets. It’s one of the most common and costly forms of fraud in the decentralized finance (DeFi) space.
Crypto rug pulls come in many forms:
Ponzi schemes. A charismatic crypto project manager convinces investors to buy into a crypto token or platform and then absconds with the funds.
Exchange scams. The head of a crypto exchange claims the platform has been hacked, only to make off with the assets stored in users’ wallets on the exchange.
Fake token launches. Malicious developers list worthless tokens on decentralized exchanges (DEXs) like Uniswap or PancakeSwap, pair them with real coins like ether (ETH) or binance coin (BNB) and then drain the liquidity pool after investors buy in — leaving holders with unsellable tokens.
Social media hype and sell-off. After building hype online and driving up the token’s price, the developer sells off their holdings — often 90% or more of the total supply — leaving investors with worthless tokens.
To add more nuance to how these rug pulls occur, we’ll discuss the three main ways developers carry out these underhanded schemes.
Three kinds of rug pulls in DeFi
The three main types of rug pulls that occur in DeFi are as follows: liquidity theft, limiting selling orders, and dumping. These methods can also be used together in the same scam.
Liquidity theft. Developers withdraw investors’ funds from the liquidity pool – the pool that contains the new asset and another more established asset like ETH or BNB. The liquidity pool is held in a smart contract, and a malicious developer can program a “back door” into a smart contract to extract investors’ funds. Once the funds have been extracted, the developer can sell them.
Limiting selling orders. Fraudulent developer programs a smart contract so that only they can sell the token they’ve developed and brought to market. In other words, investors can’t cash in when the price of this new token pumps. Only the developer can.
Dumping. The developer sells off their share of this new token – which tends to be over 50% of the total supply of the token – once its price pumps. This is sometimes referred to as a “pump and dump” scheme.
5 major crypto rug pulls
Here are five major rug pulls and crypto scams to date — each illustrating how easily hype, trust and lack of oversight can be exploited in the digital asset space.
1. OneCoin (2014-2017) — Over $4 billion
Promoted as the next revolutionary cryptocurrency, OneCoin raised an estimated $4 billion from investors worldwide. The project promised a cutting-edge blockchain and enormous returns. In reality, it never had a functioning blockchain at all.
The scheme collapsed in 2017 as regulators in multiple countries opened investigations into the project. That’s when OneCoin’s founder, Ruja Ignatova, boarded a flight to Athens — and disappeared. Known as the “Cryptoqueen,” she remains a fugitive. The United States Department of State’s Transnational Organized Crime Rewards Program is offering a reward of up to $5 million for information leading to her arrest. Cofounder Karl Greenwood was sentenced to serve up to 20 years for his role in the scheme.
OneCoin is now remembered as one of the largest and most damaging Ponzi-style schemes in crypto history.
2. BitConnect (2016–2018) — Over $2 billion
BitConnect (BCC) launched in 2016 as a lending platform that promised outsized daily returns if users locked up their bitcoin. At its peak in late 2017, the BCC token traded around $470, and the project’s market value was about $3.4 billion, making it one of the top-ranked cryptocurrencies at the time.
It unraveled in January 2018 when US regulators issued cease-and-desist orders, warning that BitConnect was selling unregistered securities and operating as a Ponzi scheme. Within days, the platform shut down and the token crashed. In total, founder Satish Kumbhani and his co-conspirators stole approximately $2.4 billion from investors.
Authorities charged Kumbhani and other promoters with wire fraud and conspiracy. In September 2025, Glenn Arcaro, a top BitConnect promoter, pleaded guilty to his role, which involved scamming investors out of $200 million alone. Satish Kumbhani remains at large.
3. PlusToken (2018–2019) — Over $2 billion
PlusToken emerged in 2018 as a mobile crypto wallet that promised high monthly returns to anyone who stored their bitcoin, ether or other coins on the app. By mid-2019, the platform had attracted between three and four million users and held an estimated $3 billion in crypto. But behind the interface lay a classic Ponzi scheme, where early withdrawals were paid out using deposits from new investors.
It unraveled in June 2019 when users reported they could no longer withdraw funds. Soon after, several core operators were arrested and extradited to China. Chinese authorities eventually apprehended more than 100 people connected to the fraud, and key ringleaders received multi-year prison sentences.
PlusToken remains one of the largest crypto scams in history. The case also underscored the importance of storing coins on a reputable hardware wallet, as many victims had trusted their funds to the platform itself.
4. Squid Game Token (2021) — $6 billion
In late 2021, at the height of the Netflix series’ popularity, developers launched the Squid Game Token (SQUID), claiming it would power a play-to-earn game inspired by the show. The token’s price skyrocketed within days, soaring from pennies to over $2,800.
But the project never delivered a working game. Instead, the developers locked selling permissions for most holders, drained the liquidity pool and disappeared with millions. The token’s value collapsed to almost nothing, wiping out $6 billion in market value in less than 20 minutes.
To date, the founders have not been identified or located, and authorities have struggled to trace the stolen funds.
5. SafeMoon (2021–2023) — Over $7 billion
Launched in early 2021, SafeMoon quickly became one of the most popular memecoins, attracting a huge following with its promise of token “reflections” — rewards distributed to existing holders from each transaction. At its peak, SafeMoon’s market cap climbed over $8 billion, and the project’s slogan, “Safely to the moon,” went viral on social media.
As the hype faded, critics accused the project’s leaders of mismanaging or misappropriating treasury funds and of making unrealistic promises about future integrations. SafeMoon’s price fell more than 90%, wiping out much of the community’s gains.
In 2023, US authorities charged founder John Karony and other executives with securities fraud, wire fraud and money laundering. In May 2025, a federal jury convicted Karony on all counts. He faces up to 45 years in prison.
How to spot a rug pull
If you are worried that a crypto project may be prone to a rug pull, consider the following items before investing:
The developer is anonymous
Most new DeFi projects on major blockchains like Ethereum, Binance Smart Chain or Solana are created and brought to market by well-known developers and executives.
If a developer for a hot new token chooses to remain anonymous, it may be because they are trying to avoid legal consequences for their deceitful tactics.
The developer doesn’t have a history in the space
Crypto developers like Gavin Wood – creator of the Polkadot (DOT) ecosystem and early coder for Ethereum – or Andre Cronje – founder of Yearn.Finance and developer in the Fantom (FTM) ecosystem – have an extensive history in the crypto space.
Not all developers in the space have to have credentials as robust as those of Wood and Cronje, but if a developer doesn’t have much history in the space, you’re right to be wary of their intentions.
Liquidity issues
If a new crypto token has a very low market cap, keep in mind that selling the token for cash may be very difficult.
A good indicator of a crypto’s liquidity is its 24-hour trading volume. Scam coins can trade in the low tens of thousands of US dollars.
You can check both a coin’s market cap and its 24-hour trading volume at CoinGecko.
Skyrocketing price with few wallet addresses
If the price of a new token with a low market cap has quickly “gone to the moon” – crypto speak for rose rapidly – chances are it will come back down just as quickly.
Also, it’s important to know how many different wallets exist on the blockchain for the coin in which you’d like to invest. You can find this information using a block explorer (e.g., Etherscan), but you also use auditing services like CertiK that will tell you how centralized – or how many tokens are stored in how many wallets – a project is.
Suspiciously high yields
If a project is offering unreasonably high staking or yield farming rates, it may be a scam.
Usually, malicious developers may offer high rates via DeFi services as a means to lure their rug pull victims in.
Steps you can take to protect yourself from rug pulls
Take the following steps to avoid getting rugged:
Buy established tokens. If you are new to the space, it may be best to dip your toes by buying some Bitcoin (BTC) or Ether (ETH). The coins are more established, have larger market caps and are less volatile than newer cryptos.
Buy from established exchanges. If you are buying a coin that isn’t listed on top exchanges like Coinbase, Kraken, or Binance.US, you may be buying a very risky asset. Exchanges like the ones listed have certain criteria that coins or tokens listed on their sites must meet before listing them for sale.
Check if a project is audited. Consider checking the rating for a coin or token with auditing platforms like CertiK or Hacken before jumping into a risky trade.
Don’t bet too much on high-risk projects. If you do decide to roll the dice on investing in a high-risk project, only invest what you are willing to lose. The more risky the bet you take, the more this rule holds true.
FTX rug pull
If you had your funds on a cryptocurrency exchange (e.g. Binance, Crypto.com) have you moved all or the bulk of them off?
Response
% of crypto investors
Yes, most or all to a software wallet
30%
Yes, most or all to a hardware wallet
27%
No, but I plan to move my funds to a more secure place
17%
No, I didn't have any of my funds on an exchange
16%
No I have funds on an exchange and I have no plans to move them
10%
Source: Finder survey by Qualtrics of 2,023 Americans
The ripple effect of the FTX collapse is far reaching with 33% of those who’ve owned crypto syaing they exited the market following the collapse. A further 31% say that while they still own crypto, they no longer actively trade.
Legit crypto exchanges and services that aren’t scams
The crypto space is exciting and adrenaline-inducing. This is why it’s all the more important to take a deep breath before buying into the latest hyped-up token.
It’s important to step back and do some research before buying a hot new coin, because if you act too hastily, you may end up the victim of a crypto rug pull.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
Frank Corva is business-to-business (B2B) correspondent for Bitcoin Magazine and formerly the cryptocurrency writer and analyst for digital assets at Finder. Frank has turned his hobby of studying and writing about crypto into a career with a mission of educating the world about this burgeoning sector of finance. He worked in Ghana and Venezuela before earning a degree in applied linguistics at Teachers College, Columbia University. He also taught writing and entertainment business courses in Japan and worked with UNICEF in Namibia before returning to the US to teach at universities in New York City. Earlier in his career, he spent years working as a publicist and graphic designer for record labels like Warner Music Group and Triple Crown Records. During that time, he was also a music journalist whose writing and photography was in published in Alternative Press, Spin and other outlets.
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Every 3 months, Finder empanels a range of industry specialists to get a pulse on what the future holds for crypto. This is a summary of those findings.
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