According to the Chainalysis report, in 2020 cryptocurrency scams increased by 48%.

What does the phrase « pulling the rug out » mean? In the cryptocurrency markets, this expression means that a team of cryptocurrency developers unexpectedly pull their projects. But all the while taking care to recover as much liquidity as possible.

Beyond this simple definition lies a simple yet complex financial mechanism. There are several methods to achieve this: limiting sale orders (by adding lines of code), manipulating the sale price (Pump and Dump) or stealing from the liquidity pool.

To guard against this, there are a few simple actions and research to do before investing.

First, be wary of anonymous projects.

Secondly, don’t be tempted by projects with a lot of hype on social networks and specialist websites.

Beware of projects that promise huge returns or commissions when you refer users.

Finally, also check the TVL, if the TVL is low it may indicate a risk of scamming.