Is a rug pull illegal?

It depends on the country and the facts. A rug pull is often treated as fraud. After the LIBRA collapse in February 2025, a federal judge in Argentina opened an investigation into the launch. Memecoin buyers should still assume that getting money back is unlikely.

Can you get your money back after a rug pull?

Usually not. Transactions on a blockchain are final, and the funds often move through many wallets quickly. Report it to the police (in the US, ic3.gov) and keep all transaction links. Ignore anyone who contacts you and offers to recover the funds for a fee: the FBI warns that these recovery offers are a common second scam.

Does locked liquidity mean a token cannot rug?

No. Locked liquidity only stops the team from removing the pool. The team can still sell a large supply into it, keep a freeze or mint permission, or slowly sell over weeks. Treat a lock as one check, not a safety guarantee.

What is the difference between a rug pull and a pump and dump?

In a pump and dump, insiders push the price up with hype and then sell at the top. In a rug pull, the team behind the token takes the money and abandons it, often by removing liquidity or blocking sells. A team that dumps its own supply is doing both, so the line is often blurry.

What Is a Rug Pull in Crypto? How to Spot One Before You Buy

Q: What is a rug pull in crypto?

A rug pull is a scam where the people behind a token take investors' money and leave. They usually do it by removing the pool's liquidity, selling a large hidden supply, or using contract code that stops other holders from selling. The price falls close to zero and buyers are left with tokens they cannot sell for much.

Key takeaways

A rug pull is a scam by the token's own team, not a hack by an outsider.
The main types: liquidity pull, honeypot or mint trap, dev dump, and slow (soft) rug.
Real cases: SQUID (2021), Hawk Tuah's HAWK (2024) and LIBRA (2025) wiped out most of their value within hours.
Before you buy, check the authorities (Solana) or contract (Base), the top holders, the liquidity, and the sell path.
If you got rugged, report it, keep the transaction links, and ignore "recovery" offers.

What is a rug pull?

A rug pull is a crypto scam where the team behind a project takes investors' money and disappears. The name comes from "pulling the rug out" from under the buyers.

Blockchain analytics firm Chainalysis counted about $2.8 billion taken in rug pulls in 2021, which was 37% of all crypto scam revenue that year, up from about 1% in 2020 (The Register, reporting Chainalysis data). Most of that sum came from one case: the Turkish exchange Thodex, where users lost over $2 billion. So the number is not only memecoins. But the method in memecoins is the same idea at a smaller and faster scale.

On a memecoin, the team (often called "the dev") controls the moment of launch. That means the dev often holds a large share of supply, the keys to the contract, or the liquidity pool. Any one of those is enough to rug.

Types of rug pull

1. Liquidity pull

A token on a DEX trades against a pool, for example TOKEN/SOL or TOKEN/ETH. The pool is what lets you sell. In a liquidity pull, the people who added the pool remove it. With no pool, there is nothing to sell into, and the price collapses. QuillAudits lists liquidity pulls as one of the main types of rug pull.

2. Honeypot and mint traps

Here the trap sits in the token's own code or permissions:

Honeypot: you can buy, but you cannot sell. On Solana, the classic tool for this is the freeze authority, which lets its holder freeze token accounts and block transfers out of them. Helius's documentation warns that this permission can be used to create a honeypot, and says memecoins should revoke it at launch (Helius docs). On Base and other EVM chains, a honeypot usually sits in the contract code, for example a rule that blocks or taxes sells.
Mint trap: the mint authority controls the creation of new tokens. Helius notes that launchpads like pump.fun set it to null so creators cannot issue new tokens at will (Helius docs). If the dev keeps it, the dev can print new supply and sell it into the pool.

3. Dev dump

The team or a group of insiders holds a big part of the supply from the start. When buyers push the price up, the insiders sell into them. The pool stays in place, but the price crashes anyway because the sell pressure is too large. This overlaps with a pump and dump.

4. Slow rug (soft rug)

A slow rug looks like a normal decline. The team stops building, sells its tokens bit by bit over days or weeks, and the community fades. QuillAudits describes the soft rug as a team that keeps "a false sense of security" while it takes funds out over time (QuillAudits). It is harder to spot, and harder to prove, than a sudden pull.

Famous rug pull examples

SQUID (2021): buyers could not sell

The SQUID token used the name of the Netflix show "Squid Game". According to Euronews, it launched on 26 October 2021 at about €0.01. On 1 November it touched about €2,472, and five minutes later it was worth €0.00068. Buyers found they could not sell. A wallet linked to the creators cashed out almost €3 million, and the project's website and social accounts were deleted the same day.

Lesson: a price that only goes up, with no sells, is a warning sign, not a good sign. Test that a token can be sold before you put real money in.

HAWK (December 2024): insiders and snipers held the supply

Influencer Hailey Welch launched the HAWK memecoin on Solana in early December 2024. Its market cap reached nearly $500 million, then fell about 95% to $25 million by the next afternoon (Forbes Australia). Reports citing Bubblemaps and DEX Screener data said 80 to 90% of the supply was in the hands of insiders or snipers. Welch said her team did not sell any tokens and tried to stop snipers.

Lesson: a famous name does not make a token safe. Check who holds the supply in the first minutes.

LIBRA (February 2025): $99 million taken from the pool

On Friday 14 February 2025, Argentina's president Javier Milei promoted the LIBRA token on X, then deleted the post and denied any link to it. The token, launched on Solana, rose above $4.50 and then fell sharply within hours. Chainalysis said eight wallets that received tokens directly from the creator withdrew about $99 million in USDC and SOL from the liquidity pool (Reuters, via Hawaii Tribune-Herald). On-chain analytics firm Bubblemaps reported that 82% of the supply was unlocked and sellable from the start (Cointelegraph). Nansen data showed only 14% of LIBRA buyers made a profit (Decrypt). A federal judge in Argentina opened an investigation.

Lesson: even a token promoted by a head of state can be a liquidity pull. The holder and supply data was public on-chain for anyone to check.

Red flags checklist

Use this before every buy. One red flag is a reason to look closer. Two or more is a reason to skip.

Mint authority still active (Solana): the dev can print new tokens.
Freeze authority still active (Solana): the dev can block your sells.
Unverified contract (Base): you cannot read what the code does.
Sell blocked or high sell tax in a honeypot test.
A few wallets hold most of the supply, or many fresh wallets bought in the same block at launch.
The dev wallet holds a large share or is already selling.
Small or unlocked liquidity compared with the market cap.
Metadata is still mutable: the name, symbol and image can change after launch.
Anonymous team, copied website, no history and only hype on social media.
Pressure to buy now: countdowns, "last chance", paid shills.
A chart that only goes up with almost no sells.

How to check a Solana or Base memecoin before you buy

The tools below are free and independent. We do not get paid by any of them. Always copy the token's contract address (CA) from the official source and paste it into each tool. Never trust a token by its name or ticker: copies of popular tokens are common.

1
Get the right contract address
Take the CA from the project's own X account or website, not from a reply or a DM. Lookalike tokens with the same name are a common trap.
2
Run a risk scanner
On Solana, paste the CA into RugCheck, a token risk scanner for Solana. On Base, Honeypot.is simulates a buy and a sell to see if you can exit. Honeypot.is itself warns that a token that is not a honeypot now can change later, so a pass is not a guarantee.
3
Check the authorities or the contract
On Solana, open the token on Solscan and look at the mint authority and the freeze authority. Both should be empty (revoked). On Base, open the token on Basescan and check that the contract source is verified.
4
Look at the holders
In the explorer's holders tab, look at the top 10 wallets. Ignore the liquidity pool address and the bonding-curve address. If a few other wallets hold a big share, a dev dump is easy.
5
Check liquidity and trading on DEX Screener
Open the pair on DEX Screener, which reads its data directly from the blockchains it tracks. Compare liquidity with market cap, and look at the buys and sells. A chart with almost no sells is a warning.
6
Test with a small amount first
Buy a small amount and sell part of it straight away. If the sell fails or the tax is high, stop. Only then decide on a larger size.

What to do if you got rugged

Stop trading that token. Do not buy more to "average down" into a dead pool.
Check your wallet permissions. If you signed anything on the project's website, revoke the token approvals (on EVM chains like Base) and move the funds you have left to a new wallet if you think the wallet is unsafe.
Save the evidence. Keep the transaction links, the CA, screenshots of the promotion and the dev's accounts.
Report it. In the US, file a report at ic3.gov. In other countries, report to the national police or cybercrime unit. The FBI says victims should keep all records and transaction details (BleepingComputer, on FBI notice PSA230811).
Ignore recovery offers. People who DM you after a loss and promise to get the funds back are usually running a second scam. The FBI says that "no private sector entity can issue seizure orders to recover stolen digital assets."

Where to go next

Best memecoin trading platforms: the tools we score with our methodology, including their safety and custody scores.
pump.fun guide: how the launchpad works and where most new Solana memecoins start.