Token Rug Pull vs NFT Rug Pull: How Scams Work and How to Avoid Them

Imagine putting your life savings into a new crypto project. You see the hype: influencers promoting it, a sleek website, a Discord full of excited users. You buy in. Then, overnight, the price crashes to zero. The team vanishes. Your tokens or NFTs are now worthless. This isn’t fiction. It’s a rug pull-and it’s happening every day on blockchain networks.

What Exactly Is a Rug Pull?

A rug pull is when the people behind a crypto project suddenly disappear with all the money investors put in. They build up trust, create fake excitement, and then yank the rug out from under everyone. The term comes from the old phrase “pulling the rug out,” meaning to suddenly remove support. In crypto, that support is liquidity, community trust, or promised utility.

Rug pulls aren’t rare. In 2023, over $3.2 billion was stolen through these scams, up from $2.8 billion the year before. They’re not just a few bad actors-they’re a full industry of deception, with specialized tools, social engineering tactics, and even AI-generated marketing now being used to make scams look real.

How Token Rug Pulls Work

Token rug pulls target fungible tokens like ERC-20 or BEP-20. These are the coins you can trade on exchanges like Uniswap or PancakeSwap. The scam follows a clear, brutal pattern.

First, the team creates a token with a catchy name-maybe something tied to a trending meme or movie, like the infamous SQUID token based on the Netflix show Squid Game. They pair it with ETH or BNB in a liquidity pool. This makes it look like the token has real value and trading volume.

Then comes the hype. They flood Twitter, Telegram, and Reddit with fake testimonials. They pay influencers. They create a sense of FOMO. Investors rush in. The token price spikes. Sometimes it goes up 1,000% in a day.

And then-bam. The developers drain the liquidity pool. They pull out all the ETH or BNB that was locked in. Without liquidity, the token can’t be sold. It’s dead. The price hits zero. And there’s no way back.

The smart contracts behind these tokens are often rigged. Hidden functions prevent you from selling. Some have “honeypots”-code that lets the devs sell but locks your tokens. Others have hidden mint functions that let them create unlimited new tokens, diluting your holdings. One study found that 8% of all Ethereum-based tokens contain code designed for rug pulls.

The whole process can take as little as 3.2 days from launch to collapse. That’s faster than most people can even read the whitepaper.

How NFT Rug Pulls Are Different

NFT rug pulls don’t drain liquidity. They drain trust.

Instead of selling a coin, they sell a digital image-usually a cartoon ape, a pixelated alien, or a generic avatar. But the real scam isn’t the image. It’s the promise.

NFT projects often claim they’ll build a game, a metaverse, a utility platform. They show roadmaps with milestones: “Phase 1: Minting,” “Phase 2: Game Beta,” “Phase 3: Marketplace Launch.” They post videos of “team members,” use fake LinkedIn profiles, and even hire actors to pose as developers on YouTube.

Investors buy in, thinking they’re getting early access to something valuable. But here’s the twist: the team never intended to deliver. After 30 to 90 days, the updates stop. The Discord goes quiet. The website disappears. The promised game? Never built. The metaverse? Just a blank screen.

A 2023 analysis found that 78% of NFT rug pulls involve abandoned utility. Another 65% involve fake roadmaps. And 42% involve stolen community funds-money meant for marketing, development, or rewards that just vanished into the devs’ wallets.

Unlike token rug pulls, NFT scams don’t crash instantly. They fade. The floor price drops slowly. The community slowly realizes they’ve been lied to. That’s why NFT rug pulls take longer-56.7 days on average-but they’re harder to catch because they don’t rely on code tricks. They rely on human psychology.

Why NFT Rug Pulls Are Harder to Detect

Token rug pulls leave digital footprints. Tools like RPHunter and RugDoc.io can scan smart contracts and flag hidden functions with 92% accuracy. You can see the liquidity pool drain in real time. Blockchain explorers show exactly where the money went.

NFT rug pulls? Not so much. There’s no liquidity pool to drain. No token supply to dump. The scam is in the story.

Most detection tools can’t tell if a roadmap is fake. They can’t verify if a team is real. They can’t detect a deepfake video of someone pretending to be the project’s CEO. That’s why 73% of successful NFT rug pulls involved verified Twitter accounts and active Discord servers. The scammers built credibility the old-fashioned way: by lying consistently.

Even worse, many NFT rug pulls target mid-sized projects-not the huge blue-chip ones like Bored Apes, but ones with 5,000 to 10,000 holders. These are the “Goldilocks” targets: big enough to attract attention, small enough to avoid scrutiny.

What You Can Do to Protect Yourself

The truth? No tool is perfect. No checklist guarantees safety. But you can drastically reduce your risk.

For token investments:

• Check the liquidity pool. Is it locked? Use tools like Unicrypt or Team Finance to see if the devs can pull it out. If it’s not locked, walk away.
• Use RugDoc.io or RPHunter. Paste the contract address. If it flags “hidden mint,” “honeypot,” or “max sell limit,” don’t buy.
• Look at the team. Are they doxxed? Do they have LinkedIn profiles that check out? If the team is anonymous, treat it like a red flag.
• Don’t chase pumps. If a token goes up 500% in 24 hours, it’s not a miracle-it’s a trap.

For NFTs:

• Read the roadmap. Does it have vague promises like “exclusive utilities” or “future partnerships”? Real projects list dates, features, and deliverables.
• Check Discord and Twitter. Are the mods active? Are they answering questions? Or is it just bots and paid shills?
• Look for code. If the project says it’ll be a game, is there a GitHub repo? Are there commits? Or is the code just a placeholder?
• Don’t buy based on hype. If everyone’s talking about it, it’s probably already too late.

Recovery Is Almost Impossible

Some people think, “I’ll just report it to the police.” Good luck.

Crypto is decentralized. There’s no central server. No CEO to sue. No customer service line. The money is gone, and it’s scattered across wallets, bridges, and mixers.

Only 8% of token rug pull victims recover anything. For NFTs, it’s 23%-slightly better, because sometimes the community bands together to buy back NFTs or launch a new project. But even then, you’re lucky to get 10% of your money back.

The SEC has gone after a few big cases-the $33 million Squid Game token settlement in early 2024 was one. But they’ve filed only 3 cases against NFT rug pulls. The system isn’t built to protect retail investors. You’re on your own.

The Future: Hybrid Rug Pulls Are Coming

The next wave of scams won’t be just tokens or just NFTs. They’ll be both.

Researchers predict that by 2025, 35% of rug pulls will be hybrid-where an NFT project issues a token to fund development, then drains both the NFT sales and the token liquidity pool. Imagine buying an NFT that gives you access to a token. The token seems legit. The NFT seems valuable. Then both vanish.

AI is making this worse. Scammers now use AI to generate fake team videos, write convincing whitepapers, and even mimic real project tones on social media. One study found 17% of Q1 2024 token rug pulls used AI-generated marketing. That number is climbing.

Regulators are starting to pay attention. The SEC says token rug pulls are a top priority. But NFTs? Still a gray area. That’s why NFT rug pulls are growing faster than token ones-47% YoY versus 28%.

Final Thought: If It Sounds Too Good to Be True, It Is

Crypto rewards curiosity. But it punishes greed.

The biggest mistake investors make isn’t lack of knowledge-it’s lack of skepticism. You don’t need to be a coder to avoid rug pulls. You just need to ask: “Why would they give me this opportunity? What’s their real incentive?”

If the team is anonymous, the roadmap is vague, the liquidity isn’t locked, and the community feels forced-walk away. No project is worth losing your money over.

Rug pulls aren’t going away. But they’re getting easier to spot-if you know what to look for. Stay sharp. Stay skeptical. And never invest more than you can afford to lose.