A rug pull is a type of crypto currency scam in which developers abandon the project and make away with investors money. This does not happen due to a negative public bias on the project or due to the adverse effects of market conditions on the project, but happens as a result of the inherent fraudulent nature of the project..

We've had so many successful cases of Crypto Rug pulls with it being the number one avenue for fraud in the blockchain space asides coerced wallet leaks and theft.

Owing to the fact that some of these projects start off as a way to connect a community of persons to an amazing real life item or valuable, most of them have been proved to be fraudulent in nature with a subsequent rug pull in the end. A prime example of this would be the SQUID GAME WEB3 project of 2021, inspired by the Netflix hit show with the same name and launched on the Binance smartchain DEX.

This project experienced a massive rise of about 35000% in just three days despite several red flags including errors in the project's whitepaper and all.. FIrst they cleared their liquidity pool, getting investors and potential buyers of the project's token to go haywire and buy massively due to the induced FOMO, after which they suffered several restrictions on their social media before they were supposedly called out by a twitter user on the project's RUG PULL....

This is but one part of this bitter cake as there are several other notable web3 projects which have experienced rug pulls, which include::

OnceCoin (Over $4 B)

Thodex Over ($2 B)

AnubisDAO ($60 M)

Uranium Finance ($50 M)

Meerkat Finance ($31 M)

Arbix Finance ($10 M)

Luna Yield ($10 M)

Snowdog ($10 M)

TurtleDex ($2.4 M).

And the legal part about this process is that the Blockchain space is a choice filed environment with you being responsible for the consequences of your financial choices and it is a widespread knowledge that no one except you would take the blame for your financial losses owing to your choices.

This is the main reason why these projects can't be called out at the inception stage because they haven't legally violated any laws......

How to Detect a RUG PULL and what to do>>>>>

Unrealistic Promises: Be wary of projects promising extraordinary returns or guaranteed profits. Such claims often indicate a scam.

when it experiences unreasonable value growth within a short period of time.....

Mostly when the developers decide to remain anonymous....

When the project arose out of no where or has no traceable history.....

Lack of Whitepaper or Roadmap: A well-defined whitepaper and clear roadmap are essential for any legitimate project. Their absence suggests a lack of transparency and potential deception.

Sudden Price Surges: Rapid, unexplained price increases, especially in low-liquidity tokens, should raise suspicion.

Photo by Sajad Nori on Unsplash

And also when your Gut tells you this is a scam but this could also be wrong.......

To minimise the risk of falling victim to crypto scams, it is crucial to adopt a cautious and informed approach:

Conduct Thorough Research: Before investing in any cryptocurrency project, conduct extensive research on its whitepaper, team members, and social media presence.

Diversify Investments: Avoid concentrating all your investments in a single project. Diversifying across different cryptocurrencies and asset classes can help mitigate risk.

Utilise Reputable Exchanges: Use established and well-regulated cryptocurrency exchanges to minimise the risk of encountering fraudulent projects.

Exercise Caution with Influencers: Be wary of investment advice provided by social media influencers, as they may be promoting scam projects for personal gain.

Prioritise Security: Employ robust security measures to protect your crypto assets, including strong passwords, two-factor authentication, and hardware wallets.

Basically, we have to be conscious of our financial decisions in the web3 space and we could step this up by only investing in stable coins, Bitcoin and its associated altcoins.....

But due to the inherent nature of Man to seek profits where he did not sow, if you really want to invest in an unknown project, then make sure to have made an ample research on the project and be sure that you would be able to bear the consequences of your financial decisions if things don't go according to the book......

Watch out for my next article let's take a deeper dive into the world of cryptocurrency and blockchain technology........ ADIOS!!!!