#10: Beware of Rug Pulls
Of all the crypto scams, the rug-pull is one of the most dramatic. It occurs when the developers of a particular crypto project suddenly pull out of the project and take all of the investors’ money with them. The thieves then typically abscond to some unknown country with the winnings and are never heard from again. Last year, approximately $7.7 billion is estimated to have been lost to such scams.
How do you tell if a company is a rug-pull waiting to happen? You can’t know for sure, obviously, but typically, these organizations are new startups, and sometimes the backers are unknown or do not give full information about themselves, according to CoinTelegraph. “Over promotion” can also be a sign of shadiness, as it may demonstrate an attempt to conceal a lack of substance. A lack of transparency around code audits is also a bad sign.
In general, you should vet an organization for how much it reveals about its developers—which can be quite hard to do, given the crypto community’s love of anonymity and privacy.
