What is a rug pull?
The pitch looks like a launch. The ending is a deleted website and an empty treasury.
On this page
A rug pull is a crypto scam in which a project's creators raise money from buyers, then abruptly abandon the project and keep the funds. The name comes from pulling a rug from under someone's feet. It often involves new tokens or NFT collections with heavy marketing and little substance.
How does a rug pull work?
The US Attorney's Office in Manhattan described a rug pull, in a 2022 case, as a scheme in which the creator of an NFT or gaming project solicits investment and then suddenly abandons the project while fraudulently keeping investors' funds. The pattern usually runs in four stages.
What did the Frosties case show?
Nothing about the sale looked unusual to buyers in the moment, which is the point: a rug pull is designed to look like a normal launch until the money arrives.
What warning signs should you look for?
Ethereum.org's guide to scam tokens lists checks that also expose many rug pulls:
| Check | Warning sign |
|---|---|
| Contract address | Same name or symbol as a known token, but a different contract than the official one |
| Liquidity | A tiny trading pool, where small purchases move the price wildly |
| Explorer labels | The token is flagged as a scam by the community |
| Website and links | Lookalike URLs, or links that arrive unsolicited |
Add the questions from how to read a crypto whitepaper: who the team is, what the money is for and who can move it. A token that appears in your wallet uninvited is a different trap — see airdrop.
What mistakes make people easy targets?
- Buying on urgency. Countdown timers and "last chance" posts are pressure, not information.
- Trusting follower counts. Hype can be bought.
- Skipping the contract check. Verify the address from official sources before buying anything.
More patterns are in common crypto scams and DeFi risks.
Questions readers ask
Is every failed crypto project a rug pull?
No. Projects fail for honest reasons too. What prosecutors described as a rug pull is the deliberate taking of funds after abandoning the project.
Where can US victims report a rug pull?
The FBI asks people who suspect crypto fraud to report it to its Internet Crime Complaint Center at ic3.gov.
A rug pull dresses up as a launch and ends as a vanishing act. Check the contract, the liquidity and the people behind a project before sending money, and treat urgency as a red flag.
Sources
- US Attorney's Office, Southern District of New York, Two defendants charged in non-fungible token (NFT) fraud and money laundering scheme (2022)Primary source
- ethereum.org, How to identify scam tokens (2026)Primary source
- Federal Bureau of Investigation, Cybercriminals defraud Hedera Hashgraph network non-custodial wallet users through NFT airdrops disguised as free rewards (2025)Primary source
Educational content only — not financial, investment, legal or tax advice. Crypto-assets are high-risk and you could lose all the money you put in. Rules differ by country; check with your national regulator. See our risk disclosure and editorial policy.
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