What is a rug pull in crypto?

A rug pull is when the developers of a crypto project abandon it after raising funds, draining liquidity from a decentralised exchange, or selling all their tokens — leaving investors with worthless holdings. The name comes from 'pulling the rug out' from under investors.

What is pig butchering?

Pig butchering (SHA ZHU PAN) is an investment fraud where scammers build a fake romantic or friendly relationship with victims over weeks or months, then introduce them to a fake investment platform. Victims invest increasingly large sums before the scammer disappears with everything. The 'pig' (victim) is fattened before the 'butchering' (theft).

Are celebrity crypto giveaways real?

No. No legitimate celebrity — Elon Musk, MrBeast, CZ, Vitalik — runs a crypto giveaway where you send crypto and get double back. This scam format has existed since 2017 and is always fraudulent. The accounts promoting these are fake or compromised.

How does a pump and dump work?

Coordinated groups accumulate a low-cap token, promote it aggressively in Telegram/Discord groups to attract buyers and inflate the price, then sell (dump) all their holdings at the peak — crashing the price and leaving late buyers with losses.

Security · Scams

Common Crypto Scams

The five most common cryptocurrency scams — how they work, what they look like in practice, and the specific red flags that identify each one.

By Ashir Khan2 min read

Ashir Khan writes about cryptocurrency security, self-custody, macro market analysis, and regulatory policy at CryptoBeacon.

Last updated: September 1, 2026

The five scam types

Rug Pull

How it works

Developers create a token or DeFi protocol, attract investment, then abandon the project — draining liquidity pools or selling all developer-held tokens, leaving other holders with worthless assets.

Red flags

⚠Anonymous team with no verifiable identity
⚠No code audit from a reputable firm
⚠Locked liquidity that expires soon
⚠Sudden large sell pressure from dev wallets

Pump and Dump

How it works

Coordinated groups accumulate a low-market-cap token, then aggressively promote it (Telegram, Discord, Twitter) to attract buyers and inflate the price. Once sufficiently inflated, they sell everything simultaneously.

Red flags

⚠Unsolicited DMs promoting a 'hidden gem'
⚠Token with no utility or roadmap
⚠Price chart shows parabolic rise with no news catalyst
⚠Telegram groups with thousands of members created recently

Fake Celebrity Giveaways

How it works

Scammers create fake accounts impersonating celebrities or verified accounts and run giveaway posts: 'Send 1 ETH, receive 2 ETH back.' They collect sent funds and send nothing.

Red flags

⚠Any 'send X to receive 2X' offer
⚠Verified-looking but recently created accounts
⚠YouTube livestreams with fake celebrity faces
⚠Urgency pressure ('limited time only')

Pig Butchering (SHA ZHU PAN)

How it works

Long-term social engineering: scammers build relationships over weeks via dating apps, social media, or WhatsApp. After establishing trust, they introduce victims to a 'profitable investment platform' (fake exchange) and encourage increasingly large deposits before the scammer disappears.

Red flags

⚠Romantic interest from a stranger online who quickly mentions crypto
⚠A friend who 'made a lot' and wants to share the platform
⚠Platform that shows large profits but prevents withdrawal
⚠Requests to pay 'taxes' or 'fees' to release funds

Exit Scam

How it works

A seemingly legitimate exchange, lending platform, or project raises funds and either suddenly shuts down, halts withdrawals citing technical issues, and then disappears with customer funds.

Red flags

⚠High advertised APYs with vague explanations
⚠Platform that limits or delays withdrawals
⚠No publicly verifiable identity for leadership
⚠Centralized custody with no transparency about reserves

The universal scam filter

Across every crypto scam, one principle holds: if something promises outsized returns with no credible mechanism, it is a scam. Crypto markets are competitive and efficient. Legitimate 2x guaranteed returns don't exist. Any promise of them is extracting value from you, not creating it.