Everything You Need to Know About Crypto Rug Pulls

Crypto rug pulls are still part of our sector. Blockchain technology’s appeal is that it offers decentralized options. However, the downside is that it gives a playground to bad actors. That’s because of minimal control. It’s not the first time that hyped projects disappear overnight with all the funds. This leaves users empty-handed and frustrated.

So, let’s take a closer look at what crypto rug pulls are. We will also cover how you can protect yourself against them.

What Are Crypto Rug Pulls?

Crypto rug pulls is a scam, usually performed by the project’s team or creators. Without obvious warning, the devs, or team, take out all liquidity. The user funds are gone and so is the project’s team. You, as an investor, are left empty-handed. Your investment went to zero and most of the time, there’s no way of getting your investment back. It’s pulling the rug out from under your investment.

On the upside, currently, there’s much more awareness. More importantly, there are also more tools at our disposition to detect or warn us for crypto rug pulls. Nonetheless, crypto rug pulls are not going away. DappRadar wrote a report about crypto rug pulls, which we use as a reference for this article.

In this report, DappRadar distinguishes between two main kinds of crypto rug pulls.

1. Soft rug pull — The team, devs, or insiders dump numerous tokens over time. This causes the price to crash. However, the team is still around, it didn’t leave the project.
2. Hard rug pull — The team shuts down the project, takes all liquidity, and disappears.

Teams often use hype and social engineering. It also rigs the metric, only to attract more users. There are many ways of doing this. For example, with spoofed transactions or using a bot that simulates engagement.

DappRadar uses the recent Mantra ($OM) event as a sample of a rug pull. So, let’s take a closer look at what DappRadar has to add to the Mantra story.

Was Mantra a Rug Pull?

So, about Mantra, you can view our video or read our article about this event. The $6 billion loss, which occurred during this event, accounts for 92% of all money lost so far this year. On social media, there were quite a few calls that saw this as one of the classic crypto rug pulls. However, keep in mind that this story is still unfolding.

The Mantra CEO, JP Mullins, also denies any wrong doing. Nonetheless, DappRadar has some interesting data to offer on this case. It argues that there were plenty of red flags. However, few of us actually saw them.

UAW, or Unique Active Wallets, is a good indicator of how active a platform is. Well, the busiest month for UAW at Mantra’s platform was in December 2024. It can only count for 64 UAW. However, there were also plenty of days with zero interaction. Other days showed between 1 and 11 interactions. These are not convincing numbers. In other words, traction on the platform is low. There’s not much growth, if any, or adoption. See the picture below.

Source: DappRadar blog

Transaction data also shows irregular interactions. Ranging between 66 and zero. This is typical behavior of dApps that may manipulate stats to look better than they are. However, it needs to be pointed out that these two stats in themselves don’t mean that the team planned a rug pull. However, it is fair to point out that the combination is cause for a red flag.

How to Prepare Yourself to Identify Potential Red Flags

Here are some ways in how you can protect yourself against crypto rug pulls. You can use on-chain data to help you out with this.

• Unique Active Wallets (UAW) — Unusual spikes or drops in UAW can mean bot activity or insider dumps. Especially directly after a token launch.
• Transaction volume and count. — High volume combined with low user activity could point to wash trading.
• Smart contract transparency — Red flags can be anonymous teams or unverified smart contracts.
• Engagement over time — Look for organic growth in users and transactions over time.

Conclusion

In 2025, we saw fewer rug pulls, but seemingly more impactful ones. In case we consider Mantra a rug pull, it accounts for 92% of losses during this year. During the same time frame in 2024, the sector lost only $90 million. That’s a 6,500% increase.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.

We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.

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