Famous Rug Pull Cases & How Much Was Lost

Quick Takeaways

• Rug pulls have stolen over $2billion from investors, dwarfing most exchange failures.
• The biggest single incident was the Thodex exchange collapse in 2021, wiping out roughly $2billion.
• DeFi tokens like AnubisDAO and meme coins such as FROGGY lose 99%+ of value within weeks.
• NFT scams-e.g., Bored Bunny-often use fake celebrity endorsements to boost sales before crashing.
• Key warning signs include anonymous teams, missing audits, and sudden liquidity withdrawals.

What a rug pull Is and Why It Matters

When a rug pull is a type of cryptocurrency fraud where creators abandon a project, drain the liquidity pool, and leave token holders with essentially worthless assets, the impact can be catastrophic. Solidus Labs estimates more than 300,000 scam tokens and two million defrauded investors, meaning the total loss exceeds the combined damage from the FTX, Celsius, and Voyager collapses.

Rug pulls fall into two broad buckets:

1. DeFi scams: malicious smart contracts let developers mint endless tokens, block sales, or levy exorbitant fees.
2. Exit scams: flashy marketing, fake partnerships, and celebrity hype are used to attract capital before the team disappears.

Both approaches rely on the same psychology-quick profits, limited due‑diligence, and the allure of being an early adopter.

Most Notorious Rug Pulls in History

Below are the cases that have shaped the narrative around crypto fraud. Each example illustrates a different execution style and scale.

• Thodex (2021) - A Turkish centralized exchange whose CEO vanished after halting withdrawals, stealing over $2billion. This is the largest single‑event loss to date and shows that even seemingly legitimate platforms can execute massive exit scams.
• BitConnect (2016) - One of the earliest high‑profile scams, promising astronomic returns via a proprietary lending algorithm. The token collapsed after regulators intervened, wiping out hundreds of millions of dollars.
• AnubisDAO (Oct2021) - Raised close to $60million in a 20‑hour flash sale, then drained the liquidity pool of wrapped Ethereum. The project claimed to be a decentralized, asset‑backed currency but offered no white paper or identifiable team.
• Squid Game Token (Oct2021) - Leveraged the Netflix series’ popularity, soaring from $0.01 to $2,861 in a week. When investors tried to cash out, the contract turned into a honeypot and developers walked away with an estimated $3.38million.
• Bored Bunny NFT (Dec2021) - Promised celebrity‑backed merchandise, a private metaverse, and 10× returns. Primary sales generated ~2,000ETH, but the floor price fell to 0.085ETH after insiders were found to have purchased the “celebrity” NFTs themselves.
• FROGGY Coin (Early2024) - Marketed as a meme token with community‑driven hype. liquidity was drained within days, leaving the token at $0.0000000074-a 99.95% drop from its all‑time high.
• Hawk Tuah (HAWK) (Dec2024) - Celebrity Hailey Welch launched the meme coin, peaking at $500million market cap before a 71% plunge to $60million in minutes. Legal action is now underway.

How Much Money Was Actually Lost?

The table below compiles the top rug pulls by stolen value, the year they occurred, and the primary mechanism used.

Common Tactics Behind the Scams

Understanding the mechanics helps investors spot red flags. Below are the most frequent tricks.

• Smart‑contract backdoors: code that lets creators mint unlimited tokens, set exorbitant sell taxes, or block transfers altogether.
• Liquidity‑drain attacks: the initial liquidity pool is funded by early investors; the devs later withdraw the entire pool, crashing the price.
• Fake whitepapers and partnerships: bogus documents list “strategic partners” that don’t exist, giving the illusion of legitimacy.
• Social‑media hype: coordinated bots, paid influencers, and celebrity shout‑outs create a fear‑of‑missing‑out (FOMO) environment.
• Honeypot contracts: the token appears tradable, but the sell function reverts, trapping funds forever.
• Deep‑faked endorsements (especially in NFT drops): AI‑generated videos or images claim famous personalities own the pieces.

Red Flags to Watch for Before You Invest

Even if a project looks polished, a few tell‑tale signs often point to a future rug pull.

1. Anonymous or pseudonymous team. Real projects usually list verifiable LinkedIn profiles or GitHub commits.
2. No third‑party audit. Check for a reputable security firm’s report; absence is a warning.
3. Unrealistic promises. Guarantees of 10× returns, “risk‑free” yields, or “guaranteed” APY are rarely legitimate.
4. Liquidity locked for a short period. If the liquidity can be removed at any time, the token is vulnerable.
5. Heavy reliance on hype. If the marketing strategy leans more on memes, celebrity shout‑outs, or viral challenges than on technical documentation, proceed cautiously.
6. Contract code not verified. On platforms like Etherscan, unverified contracts hide malicious functions.

What Regulators and Law Enforcement Are Doing

Since 2021, authorities have stepped up prosecutions. The Hawk Tuah case, for instance, resulted in a federal lawsuit filed by Burwick Law against the celebrity promoter and three accomplices. Similar actions have been taken against the founders of the Squid Game token and several unnamed DeFi scams.

However, the cross‑border nature of blockchain, combined with pseudonymity, makes enforcement a long‑haul effort. Experts advise investors to treat due‑diligence as a mandatory step rather than an optional precaution.

How to Protect Yourself and Recover Losses

While prevention is the best strategy, some steps can mitigate damage after a rug pull occurs.

• Document everything. Save transaction hashes, screenshots of promotional material, and communication logs. This aids any legal claim.
• Report to platforms. Notify the exchange where the token was listed; they may freeze the offending address.
• Use blockchain analytics. Services like Chainalysis can trace the flow of stolen funds, which can be useful for law‑enforcement cooperation.
• Consider insurance. Some DeFi protocols now offer coverage for smart‑contract failures, though premiums can be high.
• Learn from post‑mortems. Review analysis reports of past rug pulls to refine your own vetting checklist.

Takeaway Checklist for New Crypto Projects

Before you commit any capital, run through this quick list:

1. Verify team identities and past projects.
2. Check for an independent smart‑contract audit; read the full report.
3. Confirm liquidity is locked on a reputable timelock contract.
4. Read the whitepaper-look for technical detail, not just marketing fluff.
5. Search for community sentiment on Reddit, Telegram, and Discord; watch for “blocked” or deleted accounts.
6. Test a small amount first; monitor transaction behavior for hidden fees.

Frequently Asked Questions