Rug Pull Meaning in Crypto – 5 Rug Pulled Projects to Learn from [Examples Lists]

What is Rug Pull in the World of Crypto
List of 5 rug pulled projects examples
How do you know if your rug is being pulled?
How to avoid Rug Pull projects.
Bottom line

Whether you are involved in the crypto industry, or the mainstream finance world, the exposure to the possibility of being rug pulled is high. “Rug pull” has been used frequently to describe a problematic situation that occurs in the world of cryptocurrency that could have severe monetary problems for investors.

How do you stay away and be aware of rug pulled projects, and what does rug pull in crypto mean? Keep reading, and you’ll be fascinated!

What is Rug Pull in the World of Crypto

Let us say you are standing on a rug, and it’s unexpectedly pulled out from under you. You would obviously fall on the floor and spill everything you are holding on to. This is exactly what happens in the crypto world with some people.

Rug pulls are usually executed by cruel scammers who construct hype around their coins and then abandon the project, sprinting away with the money. 

These cryptocurrencies are generally done on trustworthy utility blockchains like Ethereum or Binance Chain. This is because investors who exchanged their ETH for the listed token allow the token creators to withdraw the ETH quickly and liquidate them.

Scammers will pursue wherever the money goes. Particular elements of the DeFi ecosystem, such as the comfort of creating and listing new tokens, have made rug pulls easier to pull off than ever before. 

As DeFi has opened a completely new world of finance for millions across the world, it has also opened up for potential victims of vicious scammers. The rise in Defi rug pulls should not be taken with a pinch of salt.

List of 5 rug pulled projects examples

A few projects that have been rug pulled are explained below. The 5th in the list is one of the biggest crypto rug pulls and is the most interesting of them all.

• 1. SnowDog rug pull

SnowDogDAO was a project that had an ambitious aim of becoming the reserve currency of crypto space. With Snowbank performing well, most of the people in SnowDog considered that it was a good project, mainly because the Snowbank developers had potentially more to gain if the project flourished than if it died.

Regardless, on the day of the buyback, confusion followed as it was revealed that the buyback would only be done on a custom SnowDog AMM (Automated Market Maker), rather than Trader Joe, the decentralized exchange that most were used to buy $SDOG earlier. 

When $SDOG owners finally logged into the password-protected AMM, they encountered a sharp dump. Two whale wallets had already overtaken everyone, with one selling 187 $SDOG for US$10 million, or at US$54,000 a token.

While most $SDOG holders anticipated that they were not going to be the first to sell their $SDOG tokens, real frustration arrived later when the community learned that the wallets that dumped their tokens could do so before the AMM’s password protection was lifted.

Furthermore, these wallet addresses had never been authorized by the $SDOG contract on Trader Joe platform. 

Moreover, the platform had never authorised these wallet addresses. If the team had no prior insider information, the authorization should have gone through. All these suggest that the SnowDog team had rug pulled the project.

• 2. Squid game rug pull

While Squid game is one of the most popular Netflix shows, Squid game coin rug pull is one of the most popular rug pull in the crypto world. The creators of this rug pull project swore that they would recreate the series with a play-to-earn game that would need a specific number of SQUID tokens in order to participate. 

However, unlike the TV series, which had a limit on the prize pot and number of participants, the rug pull project proclaimed that there would not be any limitation set on the final bonus and would accept unlimited participants.

In just a few days of the token trading, it had gained a significant following on social media and the price soared from a couple of cents to a couple of dollars, along with a lot of media attention. 

SQUID token went on to expand at an astonishing rate. The developers then unexpectedly rugged the token, driving the price of the token to drop from US$3,000 to virtually US$0 in a little over 5 minutes.

Due to the anti-dumping feature, numerous investors lost their life savings and were abandoned as they were not able to sell their tokens in the open market when they desired to. The developers soon ditched the project, deleted their official website, and defrauded investors of millions of dollars.

Sadly, the rug pull itself was like the final round of the Squid game show! One should have known how this project might have ended from its name alone, shouldn’t they? Just kidding! Or are we?

• 3. Mercenary rug pull

Mercenary is a medieval-themed NFT rug pulled game with play-to-earn features and a new cryptocurrency token called Mercenary Gold. 

Mercenary creators sponsored advertising on Twitter and crypto news outlets to get many people interested. And interestingly, its 8-bit aesthetic looked fairly realistic. The buzz around the project drew the prices up the roof, only to fall right back to the foundations. 

Unfortunately, it turned out to be a complete fraud. The scammers behind Mercenary Gold got away with hundreds of thousands of dollars.

Mercenary’s social media accounts have been deleted. The cached versions on Google Cache and the Internet Archive seem to be empty. The hard-earned money of people who got rug pulled has been swept under the rug. Not so ironic, isn’t it?

• 4. Blockverse rug pull

Another Crypto rug pull is an NFT game named Blockverse. Blockverse NFT is a play-to-earn NFT game based on the Minecraft universe. Via OpenSea, investors could purchase Blockverse characters and a cryptocurrency called $Diamond.

Unfortunately, the investors removed all of the real money put in Blockverse and disappeared, demolishing the project’s Discord and Twitter in the process. 

The project’s website has also been destroyed. Skeptical signs had also been noticed throughout the project while it was active. In fact, the website includes multiple spelling errors, such as “Cosemetic & Equippable Item Minting,” which are merely a few of the rug pull signs that possible NFT investors should be conscious of if they don’t want to be fooled.

• 5. Luna Yield rug pull

Luna Yield was an ecological farming project operating on the Solana (SOL) platform. The Solana (SOL) project had been growing steadily before Luna Yield vanished. The project’s creators suddenly deleted their website, Telegram, and Twitter accounts and withdrew out millions of dollars.

Following the deletion of the social media accounts, the Luna Yield investors tried to withdraw their funds that weren’t staked, but unfortunately, they were unsuccessful. 

On further inquiries, the Luna Yield community established that the project developer had approved the transactions leading to the rug pull on tracking the address.

How do you know if your rug is being pulled?

When one is stuck in a quicksand, it doesn’t take a genius to figure out that it is a quicksand, and they are doomed. 

Unfortunately, it’s not as easy to notice a rug pull when you are entangled in one. Using rug pull checkers, rug pull scanners, rug pull trackers like “Tokensniffer”, “BSChecker” and “Cryptach” can be extremely useful in order to make sure the crypto projects you’ve invested in are not a sham.

How to avoid Rug Pull projects.

We live by the quote ‘Better safe than sorry’, and here are a few ways to stay away from rug pull attacks:

• As with all frauds, the simplest way to dodge being rug pulled is to do proper due diligence.
• Always consider the utility case of the token and never invest in something you do not understand.
• Never rush into a project just because it promises high returns or has risen sharply.
• Dealing with pump and dumps, future investors should be extremely suspicious of any project whose price soars within just a few hours. 

This is undoubtedly a rug pull sign. If you see a token rise up in value, try to see if you can figure out why. 

Suppose there hasn’t been any new partnership, a new exchange listing, or any other significant announcement. In that case, it may just be an attempt to drive you and many other investors into putting money by tapping into your FOMO (fear of missing out).

Bottom line

Despite how common they are, money lost in crypto rug pulls is practically never recovered, and in most of the cases, the scammers are able to vanish without a trace. 

Does it mean you should stay away from cryptocurrency altogether? Definitely not! You wouldn’t stay away from dating just because people cheat. They say ‘hate the player, not the game’ and this applies to cryptocurrencies as well.

Be it your annoying sibling pulling your rug on a cold winter morning, or a crypto rug pull, the feeling of wanting to hold on to the rug a little is the same. We bet you don’t want to be woken up by your rug being pulled, so stay awake, and stay vigilant!