Rug pull

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What is

Rug pull


A rug pull is a kind of cryptocurrency scam. The developer of a project will simply abandon the project and run away with investors' funds, leaving them defrauded. This kind of scam usually happens in decentralized finance (DeFi)

To do so, the project's developer will promote it to attract more and more funds. Once the project has a high value, the developer pulls the rug and flees with investors' money.

rug pull
A rug pull is a kind of cryptocurrency scam

Rug pull are unethical but not always illegal

Hard rug pulls are illegal. Soft rug pulls are unethical but not always illegal. For example, if a crypto project promises to donate funds but chooses to keep the money, that’s unethical but not illegal. Either way, like most fraudulent actions in the crypto industry, both types can be challenging to follow and prosecute.

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About Scorechain

Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance, the Luxembourgish company has helped over 200 customers in 40 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets, customers onboarding, audit and law firms, and some LEAs.

Scorechain solution supports Bitcoin analytics with Lightning Network detection, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger, Tezos, and Tron with TRC10 and TRC20 tokens. The software can de-anonymize the Blockchain data and connect with sanction lists to provide risk scoring on digital assets, transactions, addresses, and entities. The risk assessment methodology applied by Scorechain has been verified and can be fully customizable to fit all jurisdictions. 300+ risk-AML scenarios are provided to its customers with a wide range of risk indicators so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.