Today, for this week's Sunday Editorial, we look at Rug Pulls. The Crypto Scam That Just Won’t Quit.
If there’s one thing the crypto world never seems to run out of, it’s drama. And right at the center of some of the biggest scandals is an age-old scam dressed up in new digital clothes: the rug pull. If you’ve spent any time in the crypto space, you’ve probably heard of it. If not, buckle up, because this is one of the most notorious ways people get burned in the world of digital assets.
What Exactly Is a Rug Pull?
A rug pull is basically a scam where developers hype up a cryptocurrency project, get a bunch of people to invest, and then suddenly disappear—taking all the funds with them. The name comes from the idea of pulling the rug out from under investors, leaving them with worthless tokens and empty wallets.
The mechanics are simple: developers launch a new token, promote it aggressively (often through influencers and social media), attract investments, and then, once the price surges, they cash out and disappear. The token crashes, and investors are left with nothing.
Rug pulls are particularly common in decentralized finance (DeFi) and among meme coins—those joke-inspired cryptocurrencies that sometimes skyrocket in value for no rational reason. Unlike Bitcoin or Ethereum, which have strong ecosystems and established communities, meme coins and newer DeFi projects often rely purely on hype.
The Latest Wave of Rug Pulls
Rug pulls are nothing new, but they keep evolving. The latest examples involve politically themed meme coins that cashed in on high-profile endorsements before crashing spectacularly.
Take the case of Argentina’s “Libra” coin. It launched with fanfare after getting a public boost from President Javier Milei. Traders jumped in, hoping to ride the wave of excitement. Within two days, the token peaked above $4.50, only to plummet by over 95% in a matter of hours. Blockchain data later revealed that a small group of insiders made off with a staggering $124.6 million while most investors lost their money.
The backlash was swift. Milei quickly distanced himself from the token, deleting his promotional post and denying any business links to it. Meanwhile, a federal judge in Argentina opened an investigation into its launch and possible fraudulent activity. For many, it was yet another reminder of why meme coins can be dangerous territory.
The Libra incident wasn’t the only one. Just days earlier, Donald Trump and his wife Melania had their own meme coins launched in their names. Trump’s coin initially soared above $70 before collapsing to around $17. Similarly, the Melania Trump-themed token spiked to over $13 before crashing to $3.49. In both cases, early insiders made huge profits while retail investors were left holding the bag.
Why Do Rug Pulls Keep Happening?
Despite repeated warnings, rug pulls continue to thrive. Why? There are a few key reasons:
Hype-Driven Markets – Crypto is fueled by speculation. People love chasing the next big thing, often without doing any research.
Lack of Regulation – Many of these scams happen in unregulated spaces where enforcement is weak or nonexistent.
Easy to Execute – Creating a token takes minutes. With the right marketing, scammers can pull off a rug pull before anyone even realizes what’s happening.
FOMO (Fear of Missing Out) – Investors see others making money and don’t want to be left out, so they jump in without caution.
Can Investors Protect Themselves?
While rug pulls aren’t going away anytime soon, there are ways to avoid becoming a victim:
Do Your Research – Look into the project’s team. If they’re anonymous or have no track record, that’s a red flag.
Check Liquidity Locks – Legitimate projects often lock up liquidity to prevent sudden cash-outs. If liquidity isn’t locked, proceed with extreme caution.
Watch for Overly Aggressive Marketing – If a coin is being pushed by influencers with no real technical backing, it’s probably just hype.
Be Skeptical of Quick Profits – If something seems too good to be true, it probably is.
The Bigger Impact on Crypto
Every rug pull damages the reputation of the crypto industry. While major coins like Bitcoin and Ethereum continue to establish themselves as legitimate assets, the flood of scams keeps public trust low and invites stricter regulations. For an industry that’s trying to gain mainstream acceptance, these high-profile scams make the road even tougher.
As the crypto space matures, it’s likely that security measures, better regulation, and smarter investors will make rug pulls less common. But for now, the scams keep coming, and the only real defense is knowledge and caution.
In the end, whether it’s meme coins, DeFi projects, or any other hyped-up token, the lesson remains the same: If you don’t understand it, don’t invest in it. Because in crypto, the rug can be pulled at any moment.
#TrusttheGoat