It’s very hard to keep up with digital and crypto lingo. But if you are dabbling in crypto, you need to know about rug pulls. What is a rug pull you ask? According to blogger Migi Delfin, “A rug pull is a fraud scheme that tricks people into investing money in a fraudulent product. In this case, with an offer for an incredible deal, an investor is enticed to invest their hard-earned money (or, in some cases, Bitcoin and other cryptos) into a token. Essentially, what happens then is that the token developers abandon the project, taking their investors’ money, and leaving little to no trace—thanks to the anonymity offered by the exchange.”
Delfin provides a wonderfully simple explanation of how a crypto rug pull can happen and what signs to watch out for to prevent getting scammed.
Crypto rug pulls appear to be happening more frequently according to a new publication by Check Point Research (CPR). According to CPR, “to create fraudulent tokens, hackers misconfigure smart contracts.” CPR outlines how hackers do this and provides tips to avoid scam coins, including:
- Diversity wallets
- Ignore ads
- Test transactions
- Double attention to increase security.
If you are dabbling in crypto, do your due diligence research into rug pulls to understand how hackers are misconfiguring smart contracts, and follow security tips to avoid getting scammed. Remember, some deals ARE too good to be true.