Colloquially known as a carpet pull, the Rug Pull is a fraudulent maneuver of developers behind a cryptocurrency project. Tokens can suffer a loud fall after the sudden withdrawal of the liquidity of the project.
The world of cryptoactives is booming and, although it can promise great returns for those who invest in an informed and conscious way, this sector is no stranger to controversial movements or fraudulent maneuvers. Among these is the Rug Pullaction that occurs when developers behind a project manage to increase the value of the Token and then suddenly withdraw the liquidity behind the same.
In the last hours, this type of controversial maneuvers positioned itself in the center of the debate after President Javier Milei promoted A cryptocurrency called $ Libra that, after a peak at its value, quickly collapsed in a few hours. Although the veracity behind the project is still investigated – and if it qualifies within this category – after the sudden fall the president eliminated the promotional post and sought to separate himself with a message through his social networks: “He was not internalized from the details of the details of the Project and after having internalized I decided not to continue disseminating (that’s why I erased the tweet). “
WHAT IS A RUG PULL
It is known as Rug Pull (in Spanish, “carpet pull”) to a very common scam model in the world of cryptoactive. It happens when developers behind a project launch a token and attract investors – with the promise of juicy yields and an innovative project – to quickly increase its value.
crypto.jpg scammer
Freepik.es
After this, the developers They decide to suddenly withdraw the funds and take the money. When the scammers empty the liquidity pools, the price of cryptoactive suddenly collapses and falls to zero. At this point, those investors who were initially attracted to lose the ability to exchange tokens for more stable or legal tender money, and Come be vanished by your savings.
The modus operandi behind a ring rug
While each case may vary, there is a pattern that can be recognized to avoid being involved in this type of fraudulent projects. It presents:
-
Token creation: Developers behind the project create a new token or cryptocurrency, and seek to promote it as a promising investment with an exponential growth potential.
-
Deceptive marketing: After the exit, the project is mounted in aggressive marketing tactics and fraudulent advertising to inflate the value of the Token. Thus, investors are attracted to reach the opportunity quickly, which creates a price bubble that rapidly increases the value of the cryptoactive.
-
Liquidity withdrawal: Once a significant amount of money was collected, the scammers withdraw the liquidity of the project, which means that tokens can no longer be purchased. This action causes a Sudden fall of the value of the token, which leads to the same (almost) zero.
-
Disappearance: The scammers disappear with investor funds, the project is dead and the people who entered it without the ability to recover the money invested.
Types of Rug Pull
This type of fraudulent projects can be divided into two major categories:
-
HARD RUG PULL: It occurs suddenly, without prior notice. Cryptoactive developers disappear – taking liquidity with them – without a trace.
-
Soft rug pull: In this type of fraudulent projects, developers gradually remove small amounts of liquidity, which can be more difficult to detect at the beginning. However, this action also produces a fall in the value of the token – more gradual – which results in the loss of investors funds.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
