The common version is simple. A team launches a token, seeds a liquidity pool, promotes it until buyers arrive, then withdraws the pooled funds — leaving a token with a price chart and no market to sell into. A variant sells a large insider allocation into the buying instead, with the same result for everyone else.
Some warning signs are checkable before buying: liquidity that is not locked, a contract whose owner can mint new supply or disable selling, holdings concentrated in a handful of wallets, and an anonymous team with no history. None of these is conclusive, and the absence of all of them is not a guarantee — but a token failing several is a token with the mechanism already in place.
How can I spot a rug pull before it happens?
Check whether liquidity is locked, whether the contract lets its owner mint or block transfers, and how concentrated holdings are. Those three cover most of the mechanisms, though none rules out a scam by itself.
Last updated October 17, 2026