Imagine investing in a crypto project that promises big profits and in the end you see the creators disappear with heavy funds leaving you with the tokens that are worthless.
Doesn't it sound scary?
So how to spot a rug pull before it's too late?
First, try finding out who is behind the project. If the the team members are not known or if there is no clear road map, this is a big red flag as the projects that usually provides detailed information about their goals and team are more likely to be legit.
If the projects are hiding these details, you should ask yourself, what are they hiding?
Next is, have you noticed sudden and remarkable price jumps in the coin without any news or updates?
While the crypto market is volatile and fluctuations occur but unexplained market movements can be a market manipulation and this could be a stage for a rug pull.
Also pay attention to who controls the coin. If a small group holds most of the token supply they could easily manipulate the market but however if they are the persons who are trustworthy and will not sell the token, it can be a green flag.
A white is like a project's blue print. If the white paper is filled with unrealistic promises and don't have solid details, it's time to stay cautious.
Always be wary of projects that locks your tokens or make withdrawals difficult. This could be a tactic to trap you before the rug is pulled.
Have you seen a project with a huge following but little engagement? Fake followers and inflated metrics are often used to create a false hype. So, take a closer look at the social media of the project if it looks too perfect.
If the developers are not responsive or non existent, that is another red flag as legit channels have open chat with the community, help in the chats and answer questions even if the questions are not positive for the team.
If you are being kept in the dark, it's time to walk away.
Rug pulls are a serious threat in the crypto industry but staying informed and cautious you can protect yourself and always do your research.
Your top priority in the crypto space should be your safety.
Image Source: Medium
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