An illustration showing a person about to step on a rug being pulled out from under them, with crypto tokens flying in the air.
The crypto world moves fast, and while innovation is exciting, it also creates room for bad actors. Among the most damaging types of scams is the rugpull — when project founders suddenly withdraw liquidity or disappear with investors’ funds.
The good news? Most rugpulls share recognizable warning signs. In this guide, we’ll explore 10 red flags that can help you spot a scam before it drains your wallet.
1. No Locked Liquidity
If the liquidity pool isn’t locked, developers can remove funds at any time.
- Check it: On Etherscan or BscScan, look for liquidity lock details (Unicrypt, Team Finance, or PinkLock).
- Red flag: Liquidity locked for less than 6 months, or no lock at all.
2. Anonymous or Unverifiable Team
Transparency matters. If founders hide behind cartoon avatars with no verifiable history, that’s a risk.
- Check it: Search for LinkedIn profiles, prior project history, or GitHub contributions.
- Red flag: No visible team, or fake names with stock photos.
3. Unoriginal or Copied Whitepaper
Scammers often recycle content from other projects.
- Check it: Copy a paragraph from the whitepaper and Google it.
- Red flag: The same text appears in other project docs or across multiple websites.
4. Imbalanced Token Distribution
If a few wallets control a majority of tokens, they can crash the price by dumping.
- Check it: Token holders tab on Etherscan.
- Red flag: Top 10 wallets hold more than 50% of total supply.
5. No Smart Contract Audit
A credible project will get a third-party audit.
- Check it: Verify audits from firms like CertiK, Hacken, or PeckShield.
- Red flag: Fake audit logos or missing audit links.
6. Honeypot or Restricted Trading Functions
Some contracts prevent users from selling.
- Check it: Use honeypot.is or tokensniffer.com.
- Red flag: Code includes restrictions on
transferFromor hidden blacklists.
7. Unrealistic Promises or Guaranteed Returns
Crypto markets are volatile; guaranteed profits don’t exist.
- Check it: Read project claims critically.
- Red flag: Phrases like “guaranteed 10x” or “zero risk.”
8. No Clear Roadmap or Real Utility
Legit projects build value; scams rely on hype.
- Check it: Does the roadmap have measurable milestones?
- Red flag: Only buzzwords like “AI”, “Web3 revolution”, or “next Solana” with no substance.
9. Sudden Social Media Hype
Paid influencers and bots can create fake buzz.
- Check it: Analyze engagement ratios (followers vs comments).
- Red flag: Hype spiked in days, mostly emojis or spam comments.
10. Suspicious Contract Code
Smart contracts sometimes contain malicious code allowing minting, pausing, or blocking.
- Check it: On Etherscan, view the contract code and search for:
mint(unlimited supply)ownerOnlyblacklistpause
- Red flag: Any function allowing the owner to manipulate token supply or freeze users.
Quick Checklist Before You Invest
| Checkpoint | Status |
|---|---|
| Liquidity Locked | ☑️ / ❌ |
| Audited Contract | ☑️ / ❌ |
| Transparent Team | ☑️ / ❌ |
| Reasonable Token Distribution | ☑️ / ❌ |
| Readable Contract | ☑️ / ❌ |
| Verified Social Presence | ☑️ / ❌ |
Download this checklist here (PDF) to keep as a quick reference before investing.
Real Example: A Classic Rugpull Pattern
Case: A meme token promises 1000x gains. Liquidity isn’t locked. Team is anonymous. Within two days of launch, price spikes 300%, then drops to zero. Devs delete social media. Funds drained.
Lesson: Hype + unlocked liquidity + anonymous devs = classic rugpull setup.
Final Thoughts
Rugpulls thrive on excitement and FOMO. Slow down, verify everything, and never invest more than you can afford to lose.
At RugScamAlert.com, we believe that education is the best defense. Use this checklist, share it with your friends, and help make crypto a safer place for everyone.
