How to SPOT a RUGPULL in crypto and how to steer of it

How To SPOT A RUGPULL In Crypto And How To Steer Of It

Go Back

🕒 1:33 PM

📅 Sep 03, 2025

✍️ By SNOWMAN

A rug pull in crypto is basically when a project founders or insiders suddenly drain all the liquidity (money) from their token, leaving investors with worthless coins. It’s one of the most common scams in DeFi.

Here’s the breakdown:

🔎 What Rugpull Is

Liquidity Drain: Developers create a new token, pair it with a stablecoin (e.g., ETH/USDT), and attract investors with hype. Once enough money flows in, they pull out all the liquidity and vanish.

Fake Utility: Many rugpull tokens promise crazy use cases or sky-high APYs but never deliver.

Sudden Exit: Price crashes to near zero instantly because nobody can sell—the project team has disappeared with investors’ funds.

🚨 How to Spot & Avoid Rugpulls

1. Check Liquidity Lock:

If liquidity isn’t locked (with tools like Unicrypt, Team.Finance), the devs can pull it anytime.

2. Verify Contract:

Read the token contract (or use scanners like Token Sniffer, DeFiSafety).

Look out for functions that allow unlimited minting or blocking sells.

3. Research the Team:

Are they anonymous with no track record? High risk.

Do they have LinkedIn, GitHub, past projects? Safer.

4. Community Vibes:

Too much hype, no real roadmap = red flag.

If admins ban people asking hard questions, watch out.

5. Liquidity vs. Market Cap:

A $5M market cap but only $50k in liquidity? Super risky—easy to rug.

6. Token Distribution:

If dev wallets hold majority supply (>20–30%), they can dump and crash price.

7. DYOR Always:

Never ape into a coin just because of hype or influencers.

👉 Golden Rule: If it looks too good to be true (e.g., “1000x guaranteed” or “risk-free 500% APY”), it’s probably a rug.