Rug Pulls In Crypto

Rug Pulls In Crypto

By 416Bitcoin | AAX Exchange | 18 Jan 2022

Rug Pulls In Crypto


Rug pull events occur when a malicious cryptocurrency developer or leader abandons a project, taking all the capital generated from that project with them. Rug pulls are an act of theft. Unfortunately, they continue to occur regularly within the cryptocurrency space. 

Rug pulls most commonly occur within meme coins and DeFi projects. These malicious schemes are on the rise, with rug pulls totaling 37% of all scam revenue in 2021, compared to 1% in 2020. Therefore, it is important that users are aware of how to spot cryptocurrencies that could be potential rug pulls. 

Famous Rug Pulls

Squid Game Token

One of the most recent rug pulls occurred with the Squid Game Token. Squid Game is a South Korean TV show that exploded in popularity in 2021. It depicted financially bankrupt people across South Korea who were selected to compete in a series of games such as tug of war. The winner of these games would win a cash prize, so large it would clear all their debts and make them extremely wealthy. However, should users lose a game, they would be killed. This was of course a fictional TV show. 
People across the globe were obsessed with Squid Game!

People across the globe were obsessed with Squid Game!

Squid Game was extremely popular and broke numerous records, such as by becoming Netflix’s largest ever TV series, reaching more than 111 million viewers worldwide. Attempting to maliciously piggyback off this success was the Squid Game Token. 

Squid Game Token Price Action (SQUID)

Initially, SQUID witnessed major positive price action, becoming one of the top-performing cryptocurrencies across the market. During only a handful of days, SQUID’s value increased from $0.02 USD to an all-time high of $2,816 USD. Users who got in early were ecstatic at the life-changing money in front of them. However, one of the issues these people encountered was that SQUID was extremely difficult to sell, this being a partial reason explaining why SQUID surged in value so rapidly. Numerous users reported that they were unable to sell their tokens on PancakeSwap. 

On 11/1/2021, the SQUID rug pull occurred. The token’s value fell from $2,861 USD to $0.0008 USD in only five minutes, as shown below. Project developers had clearly run away with the money invested in the SQUID token. 




Thodex was a Turkish centralized cryptocurrency exchange, subject to an effective rug pull by exchange employees. In April 2021, Thodex denied exchange users the ability to withdraw cryptocurrency funds. 

Funds were clearly lost and the exchange’s CEO also disappeared moments before the event occurred. The funds of over 390,000 traders were locked up with $2.8 billion USD stolen from exchange users.

The Thodex Exchange is now defunct 

Thodex Exchange 


In parallel with the exchange’s withdrawal ‘issues’, Thodex CEO Faith Faruk Ozer fled from Turkey to Albania due to fear of severe criminal charges being pressed against him. 


Thodex CEO fled Turkey with investors assets

Others within the company were unable to escape after the incident. In April 2021, 83 people were detained in Turkish police custody. Six people were arrested including the CEO’s siblings and previous senior exchange officers. The whereabouts of Ozer is currently unknown. 

What are the signs of a rug pull?

False Website Information

Malicious creators often place falsified information on their companies website in order to draw users into their schemes. For example, Squid Game Token stated that they were an official endorsement of Netflix and that they had been supported by Elon Musk. Furthermore, their team page showed a wide repertoire of organization employees, all of which were fake. 

Website Outage

If the website is having an ‘outage’ while other suspicious activity is occurring, a rug pull may be taking place. For example, Thorex had a ‘website outage’. During this outage period, senior website employees were found to be deactivating their social media accounts. 

This would have been a major red flag for the exchange’s users. However, during these circumstances, there is very little a user can do. This is due to the phrase ‘not your private keys, not your coins’. 

Lack of Public Github Activity

Github is a code hosting platform used by the majority of cryptocurrency projects. It allows for mass collaboration and public viewing of project code. Lack of Github activity can often be a red flag and can be seen as suspicious, suggesting that a rug pull could occur. 

Figure = Popular DeFi project Compound and its GitHub

Figure = Popular DeFi project Compound and its GitHub


Cryptocurrency projects normally have the majority of repositories public. This allows the general public to view all code changes made by the project. If repositories are not shared with the public, there is an increased likelihood of a rug pull occurring. Furthermore, having private repositories goes against the cryptocurrency ethos of transparency. 


Lack of prior developer activity

On Github, you can see developers’ previous Github commits. If the cryptocurrency developers working on the project all have little to no Github commits before the project, there is an increased likelihood that a rug pull will occur. Commits on Github refer to the individual changes done to a file.

What to do


When checking endorsements, checking partnership organizations’ press releases is an initial indication as to whether the partnership is genuine. If a press release has occurred or some other form of social media statements have been posted, it is likely that the partnership is real. 


Squid Game Token claimed to have numerous partnerships.


Searching the employees on LinkedIn and other socials is an initial step that can be taken to check that the employee exists. Furthermore, using the wayback machine and checking whether they were present at previous suggested roles on other company’s team pages can help verify their existence. 


Upon searching the ‘Team Members’ of Squid Game Token, which proved to have been faked


The Github of a project is extremely easy to check. Simply go to the GitHub website and search for the project. From here, you can view repositories, commits, and contributors. Have a browse around the project, check commits, forks, etc. 

For example, in the image below, we can see that the public Compound Polkadot node depository has 139 contributors regularly committing, with lots of previous experience. 


Compound / Github repository page


All in all, there are numerous ways to detect early signs of whether a cryptocurrency is a rug pull and fraudulent or a genuine project, although you can never be 100% certain whether a project will be rug pulled. However,by thoroughly researching a project before potentially investing in it, users will have a more accurate idea of whether a project will likely be rug pulled or not.

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AAX Offical Telegram Community Admin, and AAB holder. AAX is the world's first crypto exchange powered by LSEG Technology's world-renowned matching engine, giving you a chance to trade crypto at the speed of light.

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