A cryptocurrency scam in which a project's creators generate hype and attract investor funds into a new token or liquidity pool, then abruptly withdraw the pooled funds or exploit code built into the token to drain investors' holdings, leaving the token worthless and the creators unreachable, a pattern named for the sudden removal of the pooled liquidity out from under investors. The scheme is not typically charged as a standalone offense; United States federal prosecutors have instead applied existing wire fraud, securities fraud and money laundering statutes to rug-pull cases, as in the prosecution of the creators of the Frosties non-fungible token project, who were convicted of wire fraud and money laundering after abandoning the project and keeping the funds raised from buyers.
Facts
Elements of OffenseA confidence trick or fraud, perpetrated under the guise of a legitimate business, that ends when the originator absconds with the funds. 1 Classification
Offense GradeSerious or Indictable Offense 1 Connections
Sources
1. Exit scam (Wikipedia)
Opening paragraphQuote, Opening paragraph
An exit scam or rug pull is a confidence trick or fraud, perpetrated under the guise of a legitimate business, that ends when the originator absconds with the funds.
Exit scam (Wikipedia)
In Group: Online Fraud and Payment Card Crime, Lead sentenceQuote, In Group: Online Fraud and Payment Card Crime, Lead sentence
An exit scam or rug pull is a confidence trick or fraud, perpetrated under the guise of a legitimate business, that ends when the originator absconds with the funds contributed by participants.
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