What is a "rug pull"?

A "rug pull" in the world of cryptocurrency is a scam where the developers of a project suddenly abandon it, taking all invested funds with them. This leaves investors with worthless tokens or a complete loss of their investments, as if the rug has been pulled out from under them.

Here’s a more detailed explanation:

Fraud:

A rug pull involves the developers creating a new cryptocurrency or project, often with promises of high returns or revolutionary technology. They lure investors into buying the project, and once a significant amount of funds is raised, the developers withdraw all the liquidity, leaving investors with nothing.

Consequences:

The value of the project plummets, and the tokens effectively become worthless, as the developers are no longer involved, and the project is essentially dead.

Characteristics:

Rug pulls are often associated with projects that lack transparency, have anonymous developers, or make unrealistic promises.