Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”
I think &quot;rug pulls&quot; is not defined well.<p>One example of a &quot;rug pull&quot; is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam, although I understand the community expectation being undermined.<p>First: the SEC exacerbates this reality. Tokens that don&#x27;t want to be considered a security have to consider NOT providing an expectation of liquidity. The team has to avoid expectations of providing secondary market liquidity just to stay out of the crosshairs of the SEC. And even in SEC registered land, If you look at the &quot;risk factors&quot; section of public equities, they frequently say &quot;there may be no market for these securities, a secondary market may never form, there is no guarantee that it will always be there&quot;, which is true in all markets!<p>Second: with the advent of AMMs, ANYONE can provide assets into the liquidity pool. (even the acronym of AMM don&#x27;t tell you much about what this is, its just a different model of exchange that is very popular). So even if token traders had been relying on the team under an unspoken symbiosis of the team providing liquidity, the token traders now can do it themselves. This is also very common. The token traders typically follow incentives to actually do it, but they CAN without those incentives.<p>Third: Token traders are the community and can take over any project to try to make their investment more profitable, it just requires more risk. It happens, but the times it doesn&#x27;t happen the token traders just stop engaging with the project as well.<p>How can this be distinguished from other &quot;rug pulls&quot;? I don&#x27;t think it is possible.