Glossary > 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.
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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