Rug pull

A rug pull is a scam in which the creators of a crypto project abandon it and take investors' money, metaphorically pulling the rug out from under them. Common forms include draining a token's liquidity pool on a decentralised exchange, minting and dumping a huge hidden supply, and writing token contracts that let buyers buy but not sell (a "honeypot").

A well-known example is the "Squid Game" token in November 2021, which soared on hype and then collapsed to nearly zero within minutes as its creators cashed out, while holders had been unable to sell.

Warning signs include anonymous teams, unlocked or creator-controlled liquidity, a large share of supply in a few wallets, unaudited or unverified contracts, aggressive promotion and promises of guaranteed returns. If you cannot explain why a token should be worth anything, treat it as high risk.