Solidus Labs, DataVisor and Sardine describe a rug pull in similar terms. It is a crypto scam in which the people who create a token take buyers' money and walk away. Holders are left with a token that has no market value.
Key facts, per the cited vendors
- Definition: Creators take investors' funds and leave the token with no market value.
- Categories: Liquidity theft, limiting or blocking sell orders or withdrawals, and token dumping.
- Hard rug pull: Developers or administrators vanish suddenly, taking all invested funds.
- Soft rug pull: A slower, subtler exit in which funds may be taken over time.
- Honeypot: A token that buyers can purchase but cannot resell.
How insiders cash out
Sardine says insiders can pull value out of a token in several ways. They might remove the liquidity, which is the money in a trading pool that lets people trade the token for real money. They might create new tokens and sell off a large share of their own holdings. Or they might write the contract so that only they can sell.
Three types
Kaspersky, a security company, groups rug pulls into three broad categories. The first is liquidity theft. The second is limiting or blocking sell orders or withdrawals. The third is token dumping, where insiders sell their own holdings into the market.
Liquidity theft
ZenLedger, a crypto tax software company, says malicious developers can steal the liquidity from a pool. The other newly created tokens are then left with no value. A separate explainer covers how crypto tokens get their value.
Blocked selling
Solidus Labs says honeypots stop buyers from reselling the token. Sardine describes a contract that blocks sales for everyone except insiders.
Hard and soft rug pulls
DataVisor, a fraud-prevention company, separates two forms. In a hard rug pull, a project's developers or administrators suddenly and fully vanish, taking the invested money with them. A soft rug pull is a gradual or subtle exit. The perpetrators may already have been taking funds over time, rather than in one sudden move.
A documented case
Solidus Labs says the creators of the SQUID token netted over $3 million within days of its release. That is the publisher's own account.
Scale of the problem
Solidus Labs reports that over 212,000 scam tokens were created between September 2020 and January 2022. Eight percent of all ERC-20 tokens on Ethereum are designed to pull the rug. Among all BEP-20 tokens on a second blockchain, 12% are rug pulls.
Warning signs to check
ZenLedger says most rug pulls involve concentrated holdings. The top ten wallets together hold over 20% of supply, or a single wallet holds over 5%. It gives no source for those thresholds.
What the vendors list
Sardine lists four warning signs that are visible before a pull. The first is insiders holding a large share of the supply. The second is liquidity that is unlocked or can be removed. The third is unaudited or malicious contract functions. The fourth is anonymous teams. ZenLedger describes Token Sniffer, a scanner that keeps a list of recent malicious contracts, rug pulls and hacks. It also scans contracts for known scams.
Analysis: what a scan can show
A scan compares a token with known scams, so a clean result does not show that the token is safe. Five questions, asked in order, turn the warning signs into checks. They cover a small test sale, the token's pages and holder list, and research into the team.
Check a token before you buy
Answer five questions about a token to see which listed warning signs apply.
Can you sell a small test amount?
- Yes → next question
- No, the sale is blocked or fails → Selling is blocked
Is the liquidity locked against removal?
- Yes, locked → next question
- No, or it can be removed → Liquidity can be removed
Do the top ten wallets hold over 20% of supply, or one wallet over 5%?
- Yes → Concentrated holdings
- No → next question
Does the contract have unaudited or malicious functions, or does a scanner flag it?
- Yes → Contract warning sign
- No → next question
Can you identify the team behind the token?
- No, the team is anonymous → Anonymous team
- Yes → No listed sign found
Solidus Labs says honeypots stop buyers from reselling tokens. That is the trap this check looks for.
Source: What is a Rug Pull? DeFi Scams Explained (soliduslabs.com), accessed Oct 17, 2026 · What Is Rug Pull? Stop Liquidity Drain Before It Starts (sardine.ai), accessed Oct 17, 2026Removable liquidity is a warning sign Sardine lists.
Source: What Is Rug Pull? Stop Liquidity Drain Before It Starts (sardine.ai), accessed Oct 17, 2026ZenLedger says most rug pulls involve holdings this concentrated. It gives no source for those thresholds.
Source: How to Avoid Rug Pull in Crypto: Warning Signs & Tips (zenledger.io), accessed Oct 17, 2026Sardine lists unaudited or malicious functions as a warning sign. A scan is not a verdict.
Source: What Is Rug Pull? Stop Liquidity Drain Before It Starts (sardine.ai), accessed Oct 17, 2026 · How to Avoid Rug Pull in Crypto: Warning Signs & Tips (zenledger.io), accessed Oct 17, 2026Sardine lists anonymous teams as a warning sign.
Source: What Is Rug Pull? Stop Liquidity Drain Before It Starts (sardine.ai), accessed Oct 17, 2026None of these checks found a listed warning sign. That does not mean the token is safe.
Source: What Is Rug Pull? Stop Liquidity Drain Before It Starts (sardine.ai), accessed Oct 17, 2026These checks flag listed warning signs; passing them does not rule out fraud.
If it has happened
Sardine says recovery is hard, so prevention and quick tracing matter most. DataVisor says rug pull scams can be charged as illegal activities, depending on where and how they happen.
Limits of these sources
All the sources are commercial vendors: fraud prevention (Sardine and DataVisor), blockchain analysis (Solidus Labs), security software (Kaspersky) and crypto tax software (ZenLedger). None of the texts gives a publication date, and the statistics are the publishers' own figures. The holder thresholds have no source. Before you buy a new token, run the five checks in the decision above on the token's own pages. Team research goes beyond those pages.
Sources: What is a Rug Pull? DeFi Scams Explained (soliduslabs.com), accessed Oct 17, 2026 · Rug Pull Scams (datavisor.com), accessed Oct 17, 2026 · What Is Rug Pull? Stop Liquidity Drain Before It Starts (sardine.ai), accessed Oct 17, 2026 · What Are NFT Rug Pulls? How To Protect Yourself From NFT Fraud? (kaspersky.com), accessed Oct 17, 2026 · How to Avoid Rug Pull in Crypto: Warning Signs & Tips (zenledger.io), accessed Oct 17, 2026
ZIPMEX promotes trading on trade.zipmex.com. Promotions are labelled and kept separate from news coverage, which is selected and checked without regard to them. Perpetual futures are leveraged derivatives. Prices can move fast and you can lose all of your margin. Not available in every jurisdiction. Not investment advice.
