How Do I Spot a Crypto Rug Pull?

fomoFebruary 19, 2026

A rug pull is a type of crypto scam where token creators attract buyers, inflate the price, and then drain the value by selling their holdings or removing liquidity. Rug pulls are one of the biggest risks in memecoin trading, but they often follow recognizable patterns you can learn to spot. For a deeper dive, read our guide on spotting scams and low-quality tokens.

Common Types of Rug Pulls

Not all rug pulls look the same:

• Liquidity pull - The creator removes liquidity from the pool, making it impossible for anyone to sell. The token becomes worthless instantly
• Team dump - Insiders hold a large percentage of the supply and sell it all at once, crashing the price
• Slow rug - The team gradually sells their holdings over days or weeks, draining value slowly. Harder to detect but equally damaging
• Honeypot - The smart contract is coded so buyers can purchase but cannot sell. The creator is the only one who can sell

Warning Signs

Look for these red flags before buying any token:

• Unlocked liquidity - If the liquidity isn't locked or burned, the creator can pull it at any time
• Concentrated holdings - A single wallet or small group holding 20%+ of the supply is a major risk
• Anonymous team with no history - While anonymity is common in crypto, completely unknown teams with no track record are riskier
• Unrealistic promises - Guaranteed returns, celebrity endorsements, or "100x guaranteed" claims are almost always scams
• No social presence - Legitimate projects have communities. A token with no Discord, Twitter, or active community is suspicious
• Disabled selling - If you see reports of people unable to sell, avoid the token entirely

How to Protect Yourself

A few habits can dramatically reduce your risk:

• Check liquidity lock status - Always verify that liquidity is locked or burned before buying
• Review holder distribution - Look at the top holders and their percentage of supply
• Start with small positions - If you want to trade very new tokens, use small amounts you can afford to lose
• Watch what smart traders do - If experienced traders aren't touching a token, there's probably a reason
• Use token analytics - On fomo, you can check holder distribution, top holder concentration, liquidity, and volume before trading

What to Do If You Suspect a Rug Pull

• Try to sell immediately - If you can still sell, do so. Don't wait to see if it recovers
• Increase slippage if needed - In a fast-moving rug, you may need higher slippage to execute a sell
• Accept the loss - If you can't sell, accept the loss and move on. Don't send more money hoping to average down
• Report it - Warn others in the community to prevent more people from getting caught