Rug pull meaning: how a token gets rugged, step by step

To be rugged is to hold a token whose creators took the money and left. This page follows the mechanics of a pool being emptied, separates hard from soft rugs, and lists what the data and the courts say.

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Hardware wallet app screen composed in Flexdger Wallet: a portfolio named Alder, a total balance and its change for the day above a row of Transfer, Swap and Buy buttons, the list of holdings with each amount and its move for the day, in a light theme with a lavender accent.
Composed in Flexdger Wallet. Every figure on it was typed in; nothing is held, sent or received, and no chain is read.

How a pool gets emptied

On a decentralized exchange, a token is tradable because someone seeded a liquidity pool: a stock of the new token paired with a currency such as SOL or ETH. Each buyer adds currency to one side and takes tokens from the other. Every sale does the reverse, which means the currency side is the pot that all sellers will eventually need.

A rug pull is what happens when whoever seeded the pool takes that pot back. After the removal, holders still own tokens, but there is nothing to sell them into. The U.S. Department of Justice gave a plain definition in a March 2022 press release: a creator solicits investments, then abruptly abandons the project and fraudulently keeps the investors' funds.

The vocabulary follows from there. Rugged describes the victim's token, rug pull the act, rug the short noun, and to rug the verb, which Wiktionary treats as a clipping of rug pull. "I got rugged" is a report; "this will rug" is a prediction.

Two speeds

Finance Magnates distinguishes them this way. A hard rug is a sudden exit after the price has risen: the pool is pulled or the team vanishes, and the chart collapses in minutes. A soft rug is slower. Insiders sell their supply into buyers over days or weeks while the project drifts into silence. Holders end up in the same place either way.

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What the data says

Chainalysis studied every token launched in 2024, 2,063,519 in all. Using a test in which one address removed at least 65% of a pool's liquidity, it flagged 74,037 of them, or 3.59%, for patterns that may link to pump-and-dump schemes. About 94% of those pools appeared to have been rugged by the address that created them, and the average token was abandoned roughly six days after its pool opened.

Solidus Labs, a market surveillance firm, looked at 388,000 liquidity pools on one Solana exchange in a May 2025 report and found soft rug characteristics in about 93% of them.

What to look at before buying

  1. Whether the pool can be pulled. Check if the pool tokens are locked or burned. Beware of treating a lock as a shield: a July 2026 analysis on crypto.news pointed out that it covers the pool, not what insiders hold, and a creator with a big share can still sell into buyers.
  2. Who holds the coins. A few wallets with most of the supply can sink the price alone.
  3. What the contract lets someone do. An owner who can change fees, or an active mint or freeze authority on Solana, means the rules can still move. See renounced, and note that giving up owner powers does not stop a rug.
  4. The deployer's record. Most suspected rugs in the Chainalysis data came from the pool's own creator, so check what else that wallet launched.
  5. Who is behind it. In the 2022 case, prosecutors alleged the founders disguised their legal identities from buyers.
  6. Whether a sale works. If nobody can sell, you are looking at a honeypot, which usually ends in a rug.

Close cousins, told apart

EventWho actsWhat holders face
Normal dumpOrdinary holdersA falling price, no betrayal
Rug pullCreators or insidersNo pool left to sell into
HoneypotThe contract itselfSelling blocked from the start
Pump and dumpA coordinated sellerA price inflated, then sold into

The last two often describe the same token: the Chainalysis test for suspected pump-and-dump tokens rests on exactly this sort of liquidity pull.

Where the phrase comes from

It plays on the idiom "to pull the rug out from under" someone, taking away the thing they stand on. The phrase predates crypto: Wiktionary quotes a 1997 issue of Billboard listing plot twists and rug pulls in advertising. For tokens, the DOJ release calls the scheme what is "colloquially referred to" as a rug pull. Who first said it about a coin has not been documented.

Sources

Questions

Is a falling price the same as a rug?

No. Ordinary holders selling can push a price down without anyone cheating. A rug comes from the creators or insiders, through a pool removal, a supply dump or abandonment.

Is a rug pull a crime?

Sometimes. In March 2022 U.S. federal prosecutors charged two founders of an NFT project with conspiracy to commit wire fraud and money laundering over an alleged rug pull. Outcomes depend on the facts and the country, and charges are only allegations until proven.

Why is a soft rug harder to prove?

Because it looks like normal selling. Insiders unload over days or weeks while the project fades, with no single dramatic removal that points a finger. Finance Magnates describes it as siphoning liquidity gradually so suspicion arrives late.

What is the quickest way to tell I was rugged?

Look up the token's contract address on a block explorer or charting site. A large liquidity removal from the creator's address, heavy sells from creator and insider wallets, or deleted social accounts are the usual signs.

How does a honeypot differ from a rug?

In a honeypot you can buy but the token is built so you cannot sell. In a rug you can sell, but the creators have taken the liquidity or dumped their holdings, so nothing is left to sell into. A honeypot usually ends in a rug.

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