What is a rug pull?
A rug pull is a type of crypto scam in which the people behind a token suddenly abandon the project and disappear with investors money, leaving holders with tokens that are worthless and impossible to sell. The name comes from pulling the rug out from under everyone at once. Rug pulls are one of the most common ways people lose money in crypto, and almost all of them share warning signs you can learn to spot before you ever put money in. This is educational information only, not financial advice.
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How a rug pull works
In a typical rug pull, developers launch a shiny new token, hype it hard on social media, and add some liquidity so people can buy it. As money flows in and the price rises, the team quietly keeps the ability to mint unlimited new tokens, drain the liquidity pool, or block holders from selling. At the peak, they pull that lever — dumping their own huge holdings, removing the liquidity, or freezing trades — and vanish. The token price collapses to near zero in minutes and buyers are left holding coins nobody will buy.
Common types of rug pulls
There are a few classic forms. A liquidity pull removes the pool of real money that backs the token, so holders can no longer swap it for anything. A honeypot is coded so people can buy but never sell — only the creator can. A hidden-mint scam keeps the power to print endless new tokens, which the team uses to flood and crash the market. And a slow soft rug simply sees the team abandon the project and dump their tokens gradually over time.
Warning signs of a rug pull
Most rug pulls wave the same red flags. Watch for a token where the team keeps mint, freeze, or clawback authority; where a tiny number of wallets hold most of the supply; where liquidity is small, unlocked, or freshly added; where the team is anonymous with no track record; and where the marketing promises guaranteed or unrealistic returns. Any one of these is a caution; several together is a loud warning. A quick automated safety scan surfaces most of them in seconds.
How to protect yourself
The best defense is to check before you buy, never after. Run any token through a safety scanner to see its issuer authority, holder concentration, and liquidity, and walk away if the red flags stack up. Never invest more than you can afford to lose, be extra careful with brand-new tokens, and remember that hype is not safety. Stellar Scout gives any Stellar or multi-chain token an instant safety grade and flags exactly these rug-pull signals — free. You can read more about the mechanics under rug pull.
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What is a rug pull — FAQ
What is a rug pull in crypto?
A scam where the token team abandons the project and takes the money, crashing the price to near zero and leaving holders with worthless tokens.
How can you spot a rug pull?
Watch for retained mint/freeze authority, a few wallets holding most supply, small or unlocked liquidity, an anonymous team, and promises of guaranteed returns.
How do you avoid a rug pull?
Scan a token before buying, avoid brand-new hyped tokens, never invest more than you can lose, and treat stacked red flags as a hard no.
Is Stellar Scout free?
Yes — the token safety scanner is free and educational, for Stellar and major multi-chain tokens.
Educational information only, not financial advice. Always do your own research.