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[Sticky] How Does Rug Pull Happen?


Mariya
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There are three main ways for Rug Pull to happen

Yanking Liquidity: When developers develop a token, they must create a way for investors to trade that token. To do so, they put a valuable token and some of their newly created token in a trading pool. The investors give their valuable tokens to acquire new tokens. When more investors begin to buy new tokens, the price of new token rises. Then the developer pulls their initial liquidity. After yanking out valuable token, the investors will not be allowed to trade because there is nothing in the liquidity pool.

Selling shares: Rug Pull also happens when the developers sell their shares. They create worthless tokens. A token will have value only when the investors think it has value and start investing. In order attract investors, they roll out various schemes such as they will be soon developing a platform. When the price increases, they sell all the tokens they kept for themselves and then vanish.

Inability to sell: The developers add some codes to the tokens that will stop investors to sell their tokens. The investors can buy the tokens but they cannot sell. Only the developer can sell.


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ZandraJoi
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Very informative! How often does a rug pull happen? What should beginners as well as advanced people look for to prevent it from happening to them?


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cmoneyspinner
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It's good to know there are three types of “rug pulls”. But the main thing to know is that they are ILLEGAL. Per CoinMarketCap, “A rug pull is a malicious maneuver in the cryptocurrency industry where crypto developers abandon a project and run away with investors' funds.”

 Squid Game is an example of a rug pull.

* Freelancer since 2007. Earn BitcoinCash. *


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Sincerem
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That's why we shouldn't go into cryptocurrency investment without making deep.researches around the coins we should be investing on. I don't cross the top 100 coins in the coin market when choosing crypto for investment. And the coins must have enormous use cases to give me clear indication that proves to me that, it is mainly to stay and provide users with many options online to trade and make transactions easy. 


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Mariya
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Posted by: @zandrajoi

Very informative! How often does a rug pull happen? What should beginners as well as advanced people look for to prevent it from happening to them?

Actually, Rug Pull happens frequently. Sometimes millions of dollars are pulled from the market and sometimes it is just about a couple of thousand dollars. Before you invest in crypto tokens, you need to check if you are easuly exchange or sell or not. If they don't allow you to sell or exchange, it might be a scam. 


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Ana
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People should have noticed that Squid Game Token could become a Rug Pull and it was not allowed to sell or exchange. People could buy this token, but could not exchange to other tokens or withdraw as fiat money. 


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Heatman
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The social media sites are the biggest reasons why Rug pull happens because they are the one's pulling the strings for the coin to be chased by investors that makes it to boom up before it dips like crazy. 


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Sincerem
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I don't think the social medias are behind the brain that causes cryptocurrency rugpull, for the fact that, coin owners have in mind to develop a scam coin, they'll just promote it first time win over investors and collect large sum of money and dump it later. 


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