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What is a rug pull in crypto?
A rug pull is when the people behind a coin cash out and leave its buyers holding a coin that's lost most of its value. They pull the rug out from under everyone who bought.
−59%in one candle
- Their 20%, bought at launch
- 7 SOL
- Sold for
- 32 SOL
- $100 bought at the top
- $41
Three kinds of rug pull
| How it works | On pump.fun | |
|---|---|---|
| Hard rug | The creator takes the coin's liquidity out of its pool, so holders have nothing to sell into | Can't happen: the creator never holds the liquidity |
| Soft rug | The creator, or a few insiders, buy a big stack early and sell it all into later buyers | The common kind |
| Pump and dump | A group hypes a coin, often with paid posts, then sells into the buyers it brought in | Happens |
Not every crash is a rug. Most coins fall because buyers lose interest. It's a rug when the people behind the coin are the ones selling.
The stock market version
In stocks, the soft rug has a name: a pump and dump. Promoters hype a penny stock, then sell their shares to the buyers they brought in. In stock markets, that's fraud, and regulators chase it. With meme coins, nobody checks a coin before it launches, so the checks are yours.
What pump.fun rules out, and what it doesn't
pump.fun's program closes the classic rug. Nobody gets tokens for free: there's no presale and no team allocation. Nobody can mint more than a coin's 1 billion tokens. And nobody can pull the liquidity: on the bonding curve, the SOL sits in pump.fun's program, and after graduation it's in a pool the protocol owns. More on that in what pump.fun is and how it works.
What's left is selling. A creator can buy a big stack the second their coin launches, when tokens are cheapest, often spread across many wallets so it doesn't show. When buyers pile in, they sell it all into them. Every sell on the curve lowers the price, so a big one drops it hard.
What a dump does
Pick how much SOL buyers have put into a new coin, and how much of its supply the creator's wallets bought at launch. Then see what happens when they sell.
Selling 20% of the supply walks the coin back down the curve, from 90% sold to 65%. The red area under the curve is the SOL they take out.
The bigger the stack and the higher the coin has climbed, the more they take out and the further the price falls. A coin where a few wallets hold a big share can drop this way at any moment.
Red flags before you buy
- A few wallets hold a lot. On the coin's pump.fun page, look at its holders: how much the creator's wallet holds, and how much the biggest wallets hold between them. A big share in a few hands can be sold on you.
- Many wallets bought in the first second. Buys in the same block as the launch are often one person with many wallets, called a bundle.
- A creator with a trail. A creator's pump.fun profile lists the coins they've launched. A row of coins that spiked and died is a pattern.
- Hype with nothing behind it. A coin minutes old, with replies all promising the moon.
- A "new CA". A coin's CA never changes. A post saying a coin has moved to a new CA points you at a different coin, usually a vamp.
If you got rugged
A Solana transaction is final: nobody can reverse it, not pump.fun and not your wallet. You can still sell what's left, if it's worth more than the fee. And ignore anyone who offers to get your money back. "Recovery" offers are the next scam.
Launching a coin of your own? A CA that starts with its name tells buyers they've got the real one, and makes copies easy to spot. Pick your word and launch on pump.fun.
Questions
What is a rug pull in crypto?
When the people behind a coin cash out and leave its buyers holding a coin that's lost most of its value. They either pull the coin's liquidity or sell a big stack into buyers.
What's a soft rug?
A rug where the creator leaves the liquidity alone but sells a big stack they bought early, often from many wallets. The price crashes, and the coin still trades, worth far less.
Can a pump.fun coin be rugged?
Not by pulling its liquidity: pump.fun's program holds it. But a creator can buy a big stack at launch and sell it into later buyers, which is how most rugs on pump.fun work.
How do I spot a rug pull before it happens?
Check the coin's holders on pump.fun: a few wallets holding a big share can sell it on you. Watch for many wallets buying in the first second, a creator with a trail of dead coins, and hype with nothing behind it.
What's the difference between a rug pull and a pump and dump?
In a rug pull, the coin's own creators cash out. In a pump and dump, a group that may not have made the coin hypes it, then sells into the buyers it brought in. For buyers, both end the same way.
Can I get my money back after a rug pull?
Almost never. Solana transactions are final, and nobody can reverse them. Ignore anyone who offers to recover your money: recovery offers are the next scam.
