How to avoid ‘rug pulls,’ the latest cryptocurrency scam

Published May 11, 2022 4:00 AM

By ANDY ROSEN of NerdWallet

With investors eager to get in early on new cryptocurrency projects, some unscrupulous developers have attracted investments, then walked away before building what they promised — leaving their supporters with worthless holdings. The rug pull, which gets its name from the expression “pulling the rug out,” is part of a long history of investment schemes. But cryptocurrencies have particular risks due to loose regulations for fundraising. Rug pulls have been particularly common in decentralized finance projects that aim to disrupt services such as banking and insurance.

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