Rug pull crypto: has your new token suddenly lost almost all its value?
Date: | Week 43 | Reading time: 8 minutesAuthor: Simcha Schrijver
In brief
In a rug pull crypto scam, the people behind a new token or project take the money out in a short space of time, the price collapses and buyers are left holding a token worth next to nothing. Not every price fall is a rug pull: sometimes a project has simply failed. The difference can often be properly worked out.
As an independent expert firm, Paucitas handles hundreds of cases a year. Paucitas works out what happened to the project and to your money, and where the funds went after that.
Wondering whether your token collapsed because of a rug pull? Get in touch with Paucitas. A free intake comes with no obligation.
Put simply
A token that suddenly loses almost all its value may be a rug pull, but it may also be a project that did not work out. You get clarity when someone independently follows the route of the money. Ask Paucitas.
You bought a new token because everyone seemed to be talking about it. In a chat group or on social media there was a buzz about a project that had just launched, and the price climbed quickly. A few days or weeks later it all dropped away in one go. Selling no longer works, or brings in next to nothing. The website has gone quiet and nobody replies. That is a horrible feeling, and you want to know what happened. You are not the only one: this happens regularly.
What is a rug pull in crypto?
A rug pull is a type of crypto fraud in which the people behind a new token or project first draw in buyers and then take the money out of the project. The name says it all: the rug is pulled from under your feet. It often involves tokens offered on a decentralised trading venue. As soon as the creators remove the proceeds or the reserve used for trading, the price collapses. Anyone still holding tokens finds them hard or impossible to sell.
The FCA advises always stopping to check before investing, especially when an opportunity comes with pressure to act quickly (FCA, protect yourself from scams). You can read more about the term in our glossary under rug pull.
How can you tell it might be a rug pull?
One sign on its own does not say everything. If several signs come together, it is sensible to have it looked into. These five are the ones we see most in practice:
- Lots of hype and urgency. The project was pushed hard in a short time, with the message that you had to get in now.
- Creators you cannot place. There is no clear organisation or responsible person behind the project.
- Buying worked, selling did not. Getting in was easy, but when you tried to sell you got an error or almost nothing back.
- A sudden drop. The price did not fall gradually but all at once, often shortly after large amounts left the project.
- Everything goes quiet. The website disappears, chat groups are closed and accounts stop responding.
Recognise this? It is not automatically a scam. That is exactly why it helps to have it looked at calmly and independently. Paucitas is happy to take a look with you.
Is every fall in a token's price a rug pull?
No. Crypto can swing sharply in value, and many new projects do not succeed. The price then falls too, sometimes hard. The difference often lies in what happens on the blockchain: who sold, when, and where did that money go? With a failed project, the route usually looks different from a project where the creators took out large sums just before the collapse. You cannot see that at a glance, but it can be traced.
What can Paucitas find out after a rug pull?
Transactions on the blockchain are public and stay on record. Paucitas follows step by step what happened to the project: which wallets created the token, when the money left the project and which wallets it passed through next, for example to an exchange. See also how Paucitas traces crypto to an exchange. Paucitas does all tracing itself, without tracing tools.
Paucitas does more than follow transactions. Paucitas reads through all the conversations, documents, emails and other communication you have, such as messages from chat groups, screenshots of the website and your own purchases. That gives a complete picture, with a timeline and, step by step, where all the money went.
Sometimes it turns out to be a project that simply failed. Sometimes your tokens or other funds are still in a wallet of your own that you can regain access to. And sometimes the report shows where the project's money ended up. Would you like to know what this means for your situation? Get in touch and we will think it through with you.
An example from practice
A client bought a new token through her own wallet after it was promoted in a chat group. Within two weeks the price had risen sharply. When she tried to sell, it no longer worked and the group had been shut down. Paucitas went through her messages, screenshots and purchases and followed the project's wallets. This showed that almost all the money had been taken out of the project shortly before the collapse and had moved through several wallets to an exchange. With the report she knew exactly what had happened and which steps she could take.
Paucitas values privacy and never shares clients' personal details. This is a composite example: names, amounts and details differ. The situation is, however, one we see in practice.
What can you do with the Paucitas report?
The report shows whether any money is still available, or where it went, and what the next steps could be. Where it is a scam, that might be reporting it to Report Fraud or, in Scotland, to Police Scotland, with the Paucitas report as a strong attachment that sets everything out completely and clearly. Your solicitor or the exchange where the money arrived can also work with it. The report is written so that anyone can follow and understand it step by step. Unsure about another offer? See also how to recognise a fake crypto platform.
Why do people choose Paucitas?
After a rug pull, trust does not come easily. That is why Paucitas is fully transparent. Paucitas is an expert firm based in the Netherlands, founded in 2021 and registered with the Dutch Chamber of Commerce under number 83489649. Our company details are public, you are welcome to visit our office by appointment and you can read our clients' Google reviews on our site. Paucitas handles hundreds of cases a year.
An investigation takes from the same day to about two weeks. Every investigation is tailored: you receive a bespoke quote in advance that we go through together, with no surprises. You can always call, 24/7, on +31 20 244 5774. Via the contact form you will hear from us within 1 to 3 hours, and we answer emails within 24 hours, usually the same day.
Sources: FCA, protect yourself from scams; Report Fraud; Police Scotland, scams and frauds.
Questions about your own situation?
Call us directly, 24/7. The first conversation is always free of obligation.
Frequently asked questions about a rug pull crypto scam
What is a rug pull?
Paucitas explains: in a rug pull, the creators of a new token or project take the money out once buyers have come in. The price then collapses and buyers are left with tokens worth next to nothing.
My token is worth almost nothing now. Is that always a rug pull?
Paucitas sees in practice that this is not always the case. A project can also simply fail. Paucitas works out on the blockchain what happened and where the project's money went.
Can I get my money back after a rug pull?
Paucitas: that depends on your situation. If you still have access to your own wallet or account holding funds, there may still be options. If everything has been sent to the fraudsters, the picture is different. That cannot be judged from a distance. Paucitas first looks at your situation and tells you honestly what is and is not possible. Be careful with anyone who promises in advance that your money will come back. In doubt? Contact Paucitas and you will know where you stand.
What does Paucitas look into?
Paucitas reads through all conversations, emails, documents and other communication and follows the route of the project's money. You receive a timeline and a report anyone can follow step by step.
How quickly can Paucitas help and what does it cost?
Paucitas completes an investigation within the same day to about two weeks. You receive a bespoke quote in advance, with no surprises. You can always call, 24/7.
Do you have questions about this blog?
Feel free to get in touch with Paucitas. Paucitas can be reached by phone 24/7, including evenings and weekends. Through the contact form we usually reply within 1 to 3 hours, and we answer e-mail within 24 hours.
From Amsterdam, for the whole of the UK
Everything can be done fully online. Prefer to meet in person? You are very welcome at our office in Amsterdam, by appointment.
Paucitas is an independent expert firm based in the Netherlands that, for clients across the UK, investigates investment fraud and crypto fraud, establishes the origin and legitimacy of crypto assets and prepares expert reports for legal proceedings and compliance.
Your own situation
If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.
The first step is contact by phone. You can book that call by phone or through the contact form, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.