Rug pulls remain one of crypto’s most damaging scams. This article outlines what they are, the two common forms they take, and five red flags: weak communication, empty promises, fake engagement, concentrated token supply, and audit issues.
On June 15, Polyhedra Network’s native token ZKJ crashed over 60% in less than two hours, from $1.98 to an all-time low of $0.7625. A brief recovery to $1.41 was short-lived, with the token falling back below $0.80. Coinmarketcap data shows an even steeper drop of 80% to $0.33, slashing market cap to $94.76 million. The crash coincided with a collapse of the KOGE token, sparking allegations of a planned liquidity-drain operation and rug-pull.
Bitwise Alpha Strategies Head Jeff Park stated that memecoin rug-pulls may not always be illegal, depending on facts. If classified as commodities rather than securities, insider trading charges are inapplicable, but market manipulation or fraud may still apply. Argentine President Milei faces impeachment over LIBRA promotion.
Bitwise's Jeff Park suggests memecoin rug-pulls aren't always illegal, highlighting that if tokens are commodities, insider trading charges don't apply. The LIBRA crash case could escape legal action if no market manipulation is proven.
