Rug Pull Alert: Unveiling Crypto Assets Eyewash and 5 Major Self-Protection Strategies

According to blockchain analysis data, losses due to Rug Pulls are estimated to exceed $500 million in 2024. Of the total $51 billion in losses caused by crypto assets crimes in 2024, Rug Pull scams account for as much as 33.2%, while in 2020, this ratio was only 1%.

This eyewash has become one of the most common threats in the world of Crypto Assets. Especially in late November this year, discussions about multiple projects suspected of Rug Pull also emerged on trading platforms like Gate, reminding us of the reality and proximity of this risk.

01 What is a Rug Pull?

Rug Pull is an eyewash in the Crypto Assets field, referring to the behavior of project developers suddenly abandoning the project and taking away investors' funds, leaving investors holding worthless coins.

In simple terms, it's like someone suddenly pulling the rug out from under your feet, causing you to fall unexpectedly.

This type of eyewash typically occurs within the decentralized finance (DeFi) ecosystem, especially on decentralized exchanges (DEX).

Due to the fact that DEX allows users to list tokens for free and without review, combined with the simplicity of creating tokens, it provides favorable conditions for criminals.

02 The 3 Common Forms of Rug Pull

Understanding the different types of Rug Pulls is the first step in identifying and avoiding them. Each type has its unique way of operating and warning signals.

Hard Rug Pull

Developers suddenly withdraw all funds and disappear, causing investors to instantly lose all their investments, which usually occurs shortly after the project launch.

For example, after the OneCoin project raised billions of dollars in 2014, its CEO Ruja Ignatova disappeared with the funds and has been on the run ever since.

Soft Rug Pull

Developers gradually sell off tokens or reduce liquidity, leading to a slow decline in project value until it becomes useless.

SafeMoon has been accused of the team gradually selling tokens, leading to a slow decline in value. This method is more covert, and investors often suffer losses unknowingly.

Liquidity Rug Pull

This is the most common form, where developers withdraw all liquidity from the trading pool, making the tokens unsellable and the value drops to zero.

The Squid Game Token ($SQUID) in 2021 is a typical example, where after the token's market cap soared to over $1 billion, the developers suddenly withdrew all funds from the liquidity pool.

03 Identify Eyewash: 5 Major Rug Pull Warning Signs

The key to protecting yourself from Rug Pull harm is to identify potential risks in advance. Here are five important warning signals to help you make more informed decisions before investing.

Anonymous Development Team

If the project team is anonymous or uses a pseudonym and lacks clear background information, this is often a dangerous signal.

Trustworthy projects usually have publicly available team members who showcase their experience and professional background. Anonymous teams are almost impossible to hold accountable when a Rug Pull occurs.

Smart Contract Unaccounted

Smart contracts that have not been audited by a well-known third-party security company may contain hidden backdoors or vulnerabilities.

Before investing, confirm whether the project has been audited by authoritative institutions such as CertiK, and carefully review the findings in the audit report.

Liquidity not locked

If the project's liquidity is not locked or the locking time is too short, it means that developers can withdraw funds at any time.

Use tools like Unicrypt or RugDoc to confirm that liquidity is locked for at least 6 months to prevent developers from withdrawing liquidity at any time.

promises high returns

Projects that promise high returns or use marketing phrases such as “zero risk” should raise investors' vigilance.

As a user on Gate Square said: “Those who are cutting leeks have finally been exposed.” It is necessary to be skeptical of opportunities that seem too good to be true.

Abnormal capital flow

Track the inflow and outflow of funds through blockchain explorers such as Etherscan or Solscan, and observe any unusually large transactions.

For example, in late November 2025, a user pointed out that on the day a certain token was listed, “160 million coins were allocated to five market makers,” which created immense selling pressure and caused the price to collapse rapidly.

04 5 Major Strategies to Prevent Rug Pull

Understanding the risks is not enough; taking proactive measures is essential to effectively protect your assets. Here are five proven strategies that can significantly reduce the likelihood of becoming a victim of a Rug Pull.

1. Thoroughly investigate the project background: Before investing, take the time to study the project's white paper, roadmap, and the backgrounds of team members. Legitimate projects will transparently share this information. Pay attention to community feedback and expert reviews, but be cautious in distinguishing between genuine community support and artificially created false engagement.
2. Diversification of Investments: Avoid putting all your funds into one project, especially newly launched projects. Only invest an amount you can afford to lose, and diversify your investments across multiple different fields.
3. Start small: Begin with a small test investment in new projects, and consider increasing your investment after observing the project's development. This approach can limit potential losses while allowing you to gain firsthand experience of how the project operates.
4. Use real-time monitoring tools: Utilize security tools like Forta, which can provide real-time threat detection and issue warnings before suspicious transactions are executed. These tools can serve as an additional layer of security, helping you promptly identify potential risks.
5. Participate in community discussions: Join the project's official community channels and observe the frequency of developer interactions and the quality of their responses. An active and healthy community is usually a positive signal of the project's legitimacy, but also be wary of those communities that overhype and lack substantive discussions.

Future Outlook

Staying vigilant is more important than ever. The market may be “cleaning house,” but the ultimate responsibility for protecting assets lies in the hands of each investor.

In the world of Crypto Assets, a moment of negligence can be costly. Only by continuously learning, maintaining skepticism, and taking proactive measures can one navigate safely in this new field filled with opportunities and risks.

Blockchain itself is transparent; the key is to learn how to read the story it tells you.