Cryptocurrency Rug Pull Scams
Americans lost $12.5 billion to fraud in 2024, according to the FTC.
Quick Answer
A cryptocurrency rug pull is a scam where developers abandon a project and run away with investors' funds, a type of fraud that contributed to over $11.3 billion in total cryptocurrency-related losses reported by Americans in 2025 (FBI IC3 2025).
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How It Works
1
Scammers create a new cryptocurrency token and promote it heavily on social media platforms, often using influencers and creating fake hype to generate a 'fear of missing out' (FOMO) among investors.
2
As investors buy the new token, its price and the funds collected in its liquidity pool increase. The developers often promise unrealistically high returns to attract as much investment as possible.
3
The developers suddenly withdraw all the funds from the liquidity pool or sell off their massive holdings of the token. This action drains the project of its value, causing the token's price to crash to zero.
4
The anonymous developers disappear, taking down the project's website and social media accounts. Investors are left holding worthless tokens with no way to sell them or recover their money.
Red Flags
- The development team is anonymous or lacks a credible, verifiable track record.
- The project promises guaranteed, unrealistic, or excessively high returns very quickly.
- A large portion of the tokens are held by only a few wallets, which can be a sign the developers plan to dump them.
- The project's liquidity is not locked, meaning developers can withdraw funds at any time.
- The project lacks a clear, detailed whitepaper or has one that is vague and full of marketing buzzwords.
- Aggressive marketing campaigns that create extreme hype and pressure investors to buy quickly.
- The project's smart contracts have not been audited by a reputable third-party security firm.
What to Do If Targeted
- If possible, withdraw any remaining funds from the project immediately to prevent further losses.
- Stop all communication and cease sending any more money to the project developers or related accounts.
- Take screenshots and gather all documentation related to your investment, including transaction IDs (hashes), wallet addresses, and communications with the developers.
- Report the scam to the cryptocurrency exchange or platform where you purchased the token.
- File a detailed report with law enforcement agencies to aid in potential investigations and help prevent others from becoming victims.
- Consult a tax professional. In some cases, you may be able to claim your loss on your taxes as a capital loss.
How to Report It
- FBI IC3 — Report the fraud to the FBI's Internet Crime Complaint Center (IC3), providing all transaction details and communications.
- FTC — File a report with the Federal Trade Commission to help them track and combat fraudulent practices.
- FCC — File a complaint about phone scams, robocalls, or unwanted calls with the Federal Communications Commission.
- AARP Fraud Helpline — Call 877-908-3360 for free support from trained fraud specialists. Available to anyone, not just AARP members.
Key Statistics
- Americans reported over $11.3 billion in losses from crypto-related fraud in 2025. — FBI IC3 2025 Internet Crime Report
- $3.4 billion was lost to cryptocurrency rug pulls in 2024, a 22% increase from 2023. — CoinLaw 2026
- Investment scams, which include many crypto frauds, were the costliest type of fraud reported to the FTC in 2023, with consumers losing over $4.6 billion. — FTC 2024
- In 2025, cryptocurrency investment fraud alone led to an estimated $7.2 billion in losses for Americans. — FBI IC3 2025 Internet Crime Report
- More than $27 billion has been lost to cryptocurrency rug pulls and other scams since the technology's inception. — Comparitech 2026
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Frequently Asked Questions
A crypto rug pull is a type of exit scam where the creators of a new cryptocurrency project attract investment and then suddenly abandon it, taking all the investors' money. They achieve this by draining the project's liquidity pool, which causes the value of the token to drop to zero, leaving investors with worthless assets.
Rug pulls account for significant losses within the broader crypto scam landscape. In 2024, losses attributed specifically to rug pulls were estimated at $3.4 billion. This is part of the larger problem of crypto-related crime, which saw Americans report over $11.3 billion in losses to the FBI in 2025.
While the regulatory landscape for cryptocurrency is still evolving, rug pulls are considered a form of fraud and are illegal. These scams involve intentional deception for financial gain. Victims should report these incidents to law enforcement agencies like the FBI to ensure they are investigated as criminal acts.
Key red flags include an anonymous development team, promises of unrealistic and guaranteed high returns, and a lack of a third-party security audit for the project's code. Additionally, be wary of projects with unlocked liquidity pools and a high concentration of tokens held by a small number of wallets, as these signs indicate developers can easily withdraw funds or crash the market.
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