What Is a Rug Pull in Crypto?

A rug pull is a deliberate exit by the people who control a token's market. They take out the value others put in, or close the exit, leaving holders with a token nobody will take.

Most small tokens trade against another asset in an on-chain liquidity pool. Depositing both assets issues LP (liquidity provider) tokens, which stand for a share of the pool. A party holding most LP tokens can drain it.

A price collapse alone is not a rug pull; the difference is whether insiders used their control to leave while others could not.

A honeypot token lets people buy but stops most holders from selling. The block is written into the token contract, which is code: ethereum.org notes that a token contract can forbid transfers. Buyers see purchases succeed and a busy chart, while a sale may fail.

It is one of three routes described for rug pulls. In the others, a holder of most LP tokens withdraws the pool's assets, or the team sells a large held share into the pool and drains the paired asset. A chart cannot show a contract's sale restrictions.

Not by itself. A lock holds LP tokens in a contract until a set time, which makes a sudden withdrawal harder. It covers only the tokens placed in it, and a timed lock ends.

In the case below, the SEC alleges the public was told liquidity was locked while some LP tokens sat unlocked at an address one person controlled. Treat a lock claim as a lead to verify: who holds the LP tokens, what share, until when.

No single sign proves a rug pull, and passing every check does not prove safety.

• A shallow pool: if a small trade moves the price sharply, little liquidity stands behind it. ethereum.org shows a scam token where a tiny purchase moved the price over 90%.
• Concentrated LP tokens: one address holding most of them, unlocked or locked only briefly.
• A copied identity: anyone can publish a token with any name and symbol. ethereum.org says to take the contract address from the project's own website.

On January 16, 2025, the SEC announced a fraud case against a blockchain engineer over a token it says was sold as a security. The complaint alleges the defendant kept LP tokens unlocked, used them in September 2021 to withdraw liquidity, and took about $553,000, pushing the price down about 12%.

Without admitting or denying the allegations, the defendant agreed to pay $672,992 in disgorgement and prejudgment interest plus a $150,000 penalty, subject to court approval, which this guide has not confirmed. Whether a token is a security depends on its facts, and laws differ by country.

Confirmed blockchain transactions cannot be reversed, so aim to limit further loss and keep records.

• In the US, file a complaint with the FBI's Internet Crime Complaint Center (ic3.gov). IC3 says it does not work with law firms or crypto services to recover funds; ethereum.org calls paid recovery offers most likely a second scam.
• Before filing, collect the contract and pool addresses, each transaction ID with its date and amount, the wallets involved, screenshots, and where you first saw the project.
• Describe addresses and amounts, not people: a wallet shows activity, not identity.
• Move remaining assets to a new wallet the other side cannot reach, revoke token permissions given to unfamiliar contracts and change passwords on linked exchange accounts.
• If funds reached a centralized exchange, tell its support team promptly; ethereum.org notes exchanges can sometimes freeze flagged accounts.

On October 12, 2026 at 02:44 (Istanbul time), lzzo.com/rwa/meme-coins listed 23 meme coin pools paired with tokenized stock or ETF tokens. Pair ages ran from 28 to 89 days; 17 were younger than 50 days.

Listing requires an on-chain verified pool at least 14 days old that meets minimum liquidity and trading-activity rules (last reviewed October 4, 2026). Detail pages show pool liquidity, pair age, 24-hour swaps and volume.

They do not show who holds the LP tokens or whether liquidity is locked, so they cannot say whether a rug pull is likely. These tokens are not shares and may lose all their value; being listed does not mean approval.