Rug pull & fraud patterns
A rug pull is a fraud in which a project's initiators collect investor money and then disappear; it is the most common fraud pattern among small tokens.
Explained simply
The image: someone pulls the rug from under your feet. A team launches a token, drives demand with marketing, and once enough capital has come in, the initiators sell everything or drain the liquidity pool.
Related patterns: "pump and dump" (coordinated ramping and sell-off), Ponzi schemes with "guaranteed" returns, and phishing, where users are tricked into granting access to their wallet.
Warning signs: anonymous team, promised returns, time pressure, no verifiable usage, majority of tokens held by the founders.
From the familiar world
Classic investment fraud with a glossy brochure and dream returns, just faster and global. The technology is new, the trick is a hundred years old.
An example
In 2021 a token named after a well-known TV series raised millions. Within days the initiators sold their holdings and the price fell to zero.
Why it matters
Clients who have heard about crypto fraud almost always mean such cases. The distinction is simple: regulated products with a licensed custodian and a reviewed prospectus are the opposite of an anonymous token with promised returns.
To pass on
„You spot fraud by three things: anonymous team, promised returns, time pressure. Regulated products have none of them.“
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