What is a rug pull? How crypto projects vanish with investors' money
By SendPay Business · · 2 min read
A rug pull is when the people behind a crypto project attract buyers and then suddenly disappear with the money, leaving the coin almost worthless. The name comes from pulling a rug out from under someone's feet.
How a rug pull usually happens
- A new coin or project is launched with big promises and heavy promotion.
- Buyers pile in and the price rises fast.
- The creators sell their large holdings or withdraw the money backing trading.
- The price collapses and the website and social accounts go quiet.
Warning signs
Common signs include anonymous founders, promises of guaranteed or huge returns, a small group holding most of the coins, no independent code audit, pressure to buy quickly, and money that cannot be withdrawn or sold.
If you think you have been caught
Stop sending money, keep records of every payment and message, and report it to the police or your country's fraud reporting service. Be wary of anyone who then offers to recover your money for a fee, as this is a common follow-up scam.
Where SendPay fits
SendPay platforms let your customers buy, sell and hold crypto inside your own branded app, with assets held with regulated partners. SendPay does not promote or list new tokens. SendPay tells you in writing which licences apply to your platform before you pay.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.