![images (5).jpeg](https://cdn.steemitimages.com/DQmTEomKxwQHCuP3sZjSMwssMKgfEwTLkc6ywDEsYeAB6sZ/images%20(5).jpeg) [source](https://coingape.com/how-defi-rug-pulls-are-becoming-the-bane-of-the-industry/) **INTRODUCTION** One in ten chances of finding a sector in the world free of fraudulent activity. Corruption is rapidly consuming every industry. Bitcoin is not an exception. The emergence of cryptocurrency holds higher possibilities, especially for experienced users. Although losses in the crypto world are occasionally unavoidable on this path, I think there are some losses that can be prevented if we take the time to study and conduct in-depth research. Sometimes we are oblivious to the hazards that lie ahead, dismissing the warning signs while focusing on an unrealized benefit or profit. This explains why so many people fall for frauds that we could have prevented. Today, we'll examine a notion known as RUG PULL. *** **What is a rug pull** *** Just as the name suggests, that is how this phrase is defined. Just picture yourself standing on a luxurious, comfortable rug when all of a sudden, it is violently yanked away from your feet. As a result, you run the risk of falling and getting hurt. The rug that once made you feel comfortable is now hurting you. The same is true for rug pull. Rug pulling is a practice used by dishonest cryptocurrency creators who create a coin or token, ensuring that it is pumped to attract investors, basically grab all of the coin's value, and then flee with it. When investing in tokens or coin that pumps without a valid basis, one must exercise caution. These evil people pump many of these cryptocurrencies in an effort to defraud others of their hard-earned money. Rug pull is unquestionably a particular kind of exit scam in the cryptocurrency industry. Popular examples of this behavior include the recent incident known as "squid token." It's amusing and fascinating how people can become emotionally invested in things that are worthless or emotionally gullible. The squid token was created shortly after the movie "Squid Game" rose to fame and became the most sought-after film. Since of the ongoing hype and the amount of conversation around the Squid Saga, many people purchased that token right away because they believed they could do so without using DYOR. Investors' money was eventually misappropriated by the developers, resulting in the token's devaluation to zero. ![6VvuHGsoU2QBt9MXeXNdDuyd4Bmd63j7zJymDTWgdcJjo1TMANiAb7rUMZ2ht4jnbTeF1snNdzR4LQ1Kr1Qg4EdEQRusTjYzoCpmuknUynkZDjUSG4MZi1j956Wjmp.jpeg](https://cdn.steemitimages.com/DQmXCJ85A25xTdH8TyrdmRgCzP4yWcuzMvEYhuBTcAgw5mw/6VvuHGsoU2QBt9MXeXNdDuyd4Bmd63j7zJymDTWgdcJjo1TMANiAb7rUMZ2ht4jnbTeF1snNdzR4LQ1Kr1Qg4EdEQRusTjYzoCpmuknUynkZDjUSG4MZi1j956Wjmp.jpeg) _{[source](https://www.google.com/amp/s/coingape.com/from-2-trillion-mcap-to-almost-zero-squid-coin-scammers-make-3-3-m-will-sec-intervene/amp/)} *** **Types of Rug pull** *** * **Hard rug pull** A hard rug pull is a subtle form of rug pulling in which the software created for a project is maliciously coded to scam its funders. Investors would have dug deep before they realized it because it is not readily apparent on the surface. You may occasionally need to use a very little portion of your token to test the project in order to find this. Theft of liquid assets is a prime example of this rug-pulling tactic. *** * **Soft rug pull** Although the phrase "gentle rug pull" sounds delicate, its connotation is quite different. When the development team or entrepreneur dumps the asset they built after extracting all of its worth, it is known as a gentle rug pull. Here, there is no intention to install dangerous software. The idea is to raise money by pumping the coin, luring more investors, and then taking off with their cash.