Rug pulls: The crypto scam that can cost you everything — and how to avoid falling for it

Do you remember OneCoin? Bitconnect? These projects stole billions of dollars simply by disappearing. Today, with memecoins on Solana, rug pulls are happening daily — and they’re getting more sophisticated.

The “rug pull” explained in 30 seconds

A rug pull is basically this: developers launch a token, raise money, then:

• Drain the liquidity and run
• Manipulate the price and dump their tokens
• Block your sales while they sell
• Or directly code a backdoor into the smart contract

Result: your investment goes from “moon” to zero in minutes.

The 12 most common tricks (and deadly)

The basics: Classic fund drain. Developers launch, raise funds, and disappear.

The shady stuff: Manipulate prices with bots, offer impossible yields (“1000% APY”), create fake partnerships or fake audits.

The technical tricks: Modify the smart contract so you can’t sell after buying. The worst part? This is nearly impossible to detect unless you audit the code line by line.

The memecoin scam: Squid Game Token was the classic case — developers literally changed the contract so no one could sell. Result: thousands of wallets emptied.

Warning signs (don’t ignore them)

🚩 Anonymous team — If you don’t know who they are, why trust your money with them?

🚩 Unlocked liquidity — Without a “lock” on liquidity, developers can drain it whenever they want.

🚩 Unusual sell restrictions — “You can only sell 1% of the supply” = an attempt to prevent you from fleeing when the price rises.

🚩 Price spikes without reason — Artificial pumps followed by crashes are classic pump & dump schemes.

🚩 “Incredible” returns — Guaranteed 500% APY? That doesn’t exist. It’s bait.

🚩 No external audits — Serious projects pay firms like Certik or Trail of Bits. Without that: ⚠️

🚩 Generic website + copied whitepaper — Many scams reuse templates.

🚩 Aggressive social media marketing — “YOU CAN’T MISS THIS” = pump scheme.

🚩 Concentrated ownership — If 3 wallets hold 80% of tokens, get ready for a dump.

The memecoin boom = scam explosion

Before, one memecoin a month. Now? Solana + pump.fun = thousands daily.

Anyone can create one without coding. Result:

• TikTok scammers launch tokens with fake celebrity names
• There are thousands of “DOGE” variants — which one is real? No one knows
• Celebrities launch coins and disappear with the profits

Key fact: Recent research shows that celebrity-backed coins fall 94% from their peak on average. Tokens linked to Waka Flocka, Floyd Mayweather, and others lost 99%+ in a month.

How to protect yourself (the money-saving checklist)

1. Audit the contract:
Use Birdseye or Etherscan. Check:

• Was ownership renounced? (If not → run)
• Who holds the tokens? (If 5 wallets hold 80% → imminent pump & dump)
• Are there hidden functions that block your sales?

2. Avoid token generation events (TGE): Don’t send funds “to secure your allocation.” That’s scam level 101.

3. Celeb coins = graveyards:
99% die within 60 days. Would you really trust thousands of dollars with a celebrity who barely understands blockchain?

4. DYOR = “Do Your Own Research”:

• Team: Verifiable? Reputable?
• Whitepaper: Original or copied?
• Community: Real or paid bots?
• Social media: Use LunarCrush to see if activity is genuine

5. If it sounds 100x better than everything else… it’s probably a scam.

The harsh reality

The crypto space is the wild west. No regulation protects your money. If you lose $10k in a rug pull, there’s no customer service to get it back.

But not everyone is a scam. The key is: verify everything, trust nothing.

Check the contract, review token distribution, question ridiculous promises. It’s 30 minutes of work versus losing your entire investment.