How to detect a crypto carpet roll – Cryptopolitan

As more and more people put their money into cryptocurrencies, cryptocurrency pulls have become more popular in recent years. Crypto pulls are a type of exit scam involving malicious developers who code hidden backdoors into their tokens, withdraw all coins from the liquidity pool, or quickly sell large quantities of tokens to drive their price down and leave the remaining investors holding worthless resources.

A pull pull is succinctly defined as “a scam in which the team pumps up the project as much as possible before disappearing with funds, leaving investors with a worthless asset” (perhaps with no exit cash). The term may have come from the idiomatic expression pull the rug out (from under someone) or to suddenly take away an important support from someone. A rug depicts the stolen resource.

Carpet pulls come in various flavors, but usually involve some aspect of limited liquidity or a quick sale where the price depreciates very quickly. Some examples of carpets can be found here. Keep in mind that just because a top member of a team announces that she’s leaving the project or resigning, that doesn’t exactly mean it’s a rug. When Charlie Lee sold his LTC to Summit, the project didn’t die.

Therefore, it is important that all potential cryptocurrency investors understand how to protect themselves from these types of scams before investing money in digital currency projects. To do this, they will need to know the different types of pitches on the carpet and how to detect them.

Pull the carpet hard and soft

There are two main types of cryptocurrency pulls: hard pulls and soft pulls.

Hard rug pulls are a type of exit scam that can be particularly devastating for investors. They involve malicious developers who code hidden backdoors into their tokens, which allow them to quickly withdraw all coins from the liquidity pool. This allows them to take advantage of unsuspecting investors who may not be aware of the backdoor.

Soft rug pulls, on the other hand, occur when token developers dump their crypto assets quickly. This is done to devalue the token which leaves the remaining investors holding a much less valuable asset than they initially invested in. Although this may not be

How to detect a cryptocurrency pull

1. Look for hidden backdoors: Hard rug pulls involve malicious developers hardcoding hidden backdoors into their token, so watch out for these.

2. Check the liquidity pool: If all the coins in the liquidity pool have been withdrawn quickly, this could be a sign of a cryptocurrency pull.

3. Watch out for sudden drops in price: If you notice a token’s price suddenly dropping dramatically, it could be due to token developers rapidly dumping their crypto assets, also known as a soft rug pull.

4. Know when to stop investing: When you start to notice the signs of a potential crypto pull, it’s important to know when it’s enough and stop investing in that project before your funds are lost forever.

5 Be aware of recent scams: Make sure you stay up to date with crypto scam news and developments to protect yourself from falling victim to one in future investments.

6. Thorough Project Research: Always take the time to thoroughly research a digital currency project before investing any money in it. Watch out for red flags that could indicate a potential cryptocurrency pull and try to avoid them at all costs.

7. Follow Reputable Sources: Make sure you only follow reputable sources of information about the digital currency project you are interested in investing in. This will help ensure that you are getting accurate information about the project and will also help protect you from falling victim to a cryptocurrency pull.

8. Use Reputable Exchanges: When trading digital currencies, make sure you only use reputable exchanges as there have been reports of unscrupulous exchanges engaging in cryptocurrency pull scams.

History of crypto carpet pulls

Cryptocurrency pulls have been around since the early days of cryptocurrency. The first recorded instance of a crypto hack occurred in 2014, when Trendon Shavers, operator of the Bitcoin Savings and Trust Ponzi scheme, was arrested for handling an $80 million fraud. Since then, other examples of cryptocurrency pulls have occurred regularly with some high-profile cases involving the theft of large amounts of money from unsuspecting investors.

In 2017, CoinDash developers lost $7 million after malicious hackers took advantage of their Initial Coin Offering (ICO) by substituting their payout address with one belonging to the hackers. This caused many investors to send funds to the wrong address and never received any tokens or refunds. In 2018, users of the Kucoin exchange lost more than $150 million due to a smart contract bug that allowed malicious actors to withdraw funds from various wallets linked to the platform’s ICO system without permission.

In 2020, Gerald Cotten, founder of the QuadrigaCX exchange, passed away unexpectedly leaving behind over $190 million in customer deposits locked on his encrypted laptop as he was the only person who had access to it. Without prior knowledge of how these digital assets were stored and protected, this incident prevented thousands of people from accessing their funds and unleashed a wave of criticism against the exchange’s management.

In 2021, an estimated $7.7 billion was stolen from investors in cryptocurrency scams. These investors thought they were investing their money in reputable companies, but ultimately had their investment opportunities snatched away. According to the results of Solidus Labs’ 2022 Rug Pull study, an average of 350 fraudulent crypto tokens were generated every day with the intention of defrauding millions of investors.

Conclusion

Regardless of how it is done, cryptocurrency pulls are a serious problem that can lead to millions of dollars of digital currency being lost in an instant. Therefore, it is important for investors to be aware of the common tactics used by malicious actors to spot and avoid potential tug-of-war before they happen. By following the suggestions above, investors should be better able to protect themselves from falling victim to a crypto pull and keep their digital currency safe. By staying vigilant and doing your due diligence, you can protect yourself from crypto carpet tugs and ensure you are making well-informed investments in the future. Good luck!