Like any other flourishing industry, the Decentralized Finance (DeFi) and Crypto spaces have attracted many malicious actors who have lured investors and successfully scammed large amounts of money with their fake projects. In 2021, rug pulls consisted of 37% of cryptocurrency scam revenue, compared to a negligible 1% in 2020. The term was coined after the expression “pulling the rug out from under”, which means to abruptly withdraw support. What is Rug Pulls? The term is often thrown over the internet by exasperated investors who have lost their money. But what are rug pulls? Rug pulls are essentially projects where developers siphon large amounts of money from investors, and then withdraw everything from the liquidity pool, causing the value of the cryptocurrency created for the “project” to drop drastically. They are intricate and manipulative scams that usually occur on Decentralized Exchanges (DEXs). How long does rug pull last? While rug pulls do not have a general time frame to classify them, any crypto coin suspiciously skyrocketing in price is relatively more likely to be a scam. Here are some examples of the most notorious rug pull scams to take place in recent times: Thodex Thodex is a Turkish centralized exchange platform that obstructed its user’s ability to withdraw any and all funds. Shortly after, their CEO disappeared and the platform went dark, resulting in a loss of over $2 billion in cryptocurrency Squid Ga...
