"Beware of Rug Pull Scams"—Binance Releases Pre-Investment Checklist

[Financial News] Binance has released a pre-investment checklist for rug pulls, a type of crypto-asset scam.
According to the crypto-asset industry on the 14th, a rug pull is a scam in which project developers or insiders suddenly withdraw liquidity supplied to a trading pool or sell large amounts of tokens at once, driving down asset values and causing losses for ordinary investors.
Rug pulls can exhibit characteristics also seen in legitimate projects, such as rising prices, high trading volumes, verified smart contract code, and developers relinquishing ownership. As a result, they are difficult to identify based solely on outward indicators.
Scam groups can artificially inflate trading volumes through wash trading, buying and selling the same tokens among multiple wallets they control. They may also use numerous wallets to increase the holder count, making it appear that more investors have joined than actually have.
They may also create copycat tokens by misappropriating the names or logos of promising, highly trusted projects, then encourage purchases through social media, Telegram, Discord, or direct messages.
Binance presented key checks users should make before purchasing tokens. Investors should examine whether project insiders can arbitrarily withdraw liquidity; whether token supplies are excessively concentrated in a small number of wallets; whether prices, trading volumes, and holder counts have surged in a short period; and whether guaranteed returns are being offered or immediate purchases are being urged. To prevent losses from impersonation tokens, users should also directly verify contract addresses through official channels.
Users should also note that verification of a smart contract only means that its code can be reviewed; it does not guarantee the project’s reliability. Locked liquidity can reduce the risk of sudden withdrawals, but it cannot prevent insiders from selling large amounts of tokens they hold. Users must also check whether a large community or high trading volume has been built through actual users and genuine demand.
Binance also provided guidance on its risk-warning system. The system cannot perfectly predict insiders’ hidden intentions or unexpected future actions. Binance emphasized that the absence of a system warning does not prove that a project is safe.
A Binance representative said, "Because rug pulls are difficult to distinguish from legitimate projects based on just a few indicators, it is more important than anything for investors to check the warning signs themselves."

[email protected] Lim Sang-hyeok Reporter