How to avoid rug pull, how to avoid it

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How to avoid rug pull, how to avoid it

Scamsters have defrauded thousands of people in Himachal Pradesh by promising high returns through investment in crypto assets in a short period.

The gang's kingpin, who is not yet to be arrested, employed a Ponzi scheme method to lure people and manipulated the prices of the cryptocurrencies they used to swindle money from investors.

The police said scamsters have launched new cryptocurrency assets and also jacked up the prices of these digital currencies, which is called a rug pull in the crypto world.

What is this rug pulling? Why is it pulling?

A rug pull is a cryptocurrency scam in which developers of a new cryptocurrency project abandoned the project and took investors' money. This may occur in various ways, such as disappearing with the project's liquidity, disabling the project's website and social media accounts, or making it impossible for investors to sell their tokens.

Fraudsters may dump their tokens onto the market, causing the price to plummet in the rug pull.

Rug pull is actually derived from the English phrase to pull the rug out of under someone, means to remove support to someone suddenly.

Rug pull is a major concern in the cryptocurrency industry, with billions of dollars lost annually to such scams. In a recent report, Chainalysis found that rug pulls accounted for over 36 percent of all cryptocurrency scams in 2021.

To avoid being a victim of a rug pull, here are some ways to avoid it. Investors in crypto must be careful about a few things:

Do your research before investing in any cryptocurrency project. Examine the team behind the project and see if they have a good track record.

Be cautious about high returns and low risk: Beware of projects with high returns and low risk. If a business offers high returns and low risk, it's probably a scam. It's not possible to guarantee a guaranteed investment in cryptocurrencies, as it's a volatile asset class.

Beware of projects that are heavily hyped on social media. Scammers often use social media and other platforms to hype up their projects. Be wary of any project that is heavily promoted without any substance behind it.

Reward yourself for investing only what you can afford to lose. If you can afford to lose a few pounds, investing in cryptocurrencies is a risky investment.