A rug pull in the crypto and web 3 spaces refers to a type of investment scam. It is what happens when crypto developers attract early investors to a project and then quickly abandon it, by taking off with the funds or by selling their pre-mined assets.
Because the web3 space allowed some people to get rich pretty fast by investing in the right projects, the appetite for spectacularly performing projects is of course very high in this space. Unfortunately, this leaves the door open to scammers who take advantage of investors who skip their due diligence for the sake of quick earnings.
The rug pull occurs when a developer or creator will promote a project such as a new coin or NFT release and then disappear with investor money. Sadly, the perpetrators of rug pulls are difficult to track down after the fact, as the decentralized and pseudonymous nature of blockchain allows those involved to conceal their identities.
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