Every week, someone loses thousands of dollars to a crypto project that vanishes overnight. No warning. No explanation. Just a silent website and empty social media accounts. These aren’t glitches. They’re exit scams - carefully planned betrayals where the people behind a crypto project disappear with your money. And they’re getting smarter.
In 2022, investors lost $5.8 billion to crypto scams. Exit scams made up nearly 19% of all new crypto projects that year. That’s not rare. It’s routine. And the worst part? Most victims saw the signs - but ignored them.
What Exactly Is an Exit Scam?
An exit scam isn’t just a failed startup. It’s fraud with a script. The team builds hype - flashy website, celebrity endorsements (fake or paid), whitepapers full of buzzwords, and promises of 1,000% returns. Then, when enough money pours in, they pull the plug. They drain the liquidity pool. They disable withdrawals. And they vanish.
It’s different from a rug pull, but they’re cousins. Rug pulls happen mostly in DeFi - where devs suddenly pull all the money out of a liquidity pool. Exit scams can happen anywhere: new tokens, NFT projects, gaming coins, even apps that never existed. The goal is the same: take the cash and run.
The first big one? Confido in 2017. They raised $375,000 promising secure escrow services. Then they disappeared. Since then, the playbook hasn’t changed - just the scale. In 2021, the $SQUID token tied to the Netflix show Squid Game tricked people into buying tokens. The devs held 90% of the supply. They sold everything in one day. Net profit: $6.38 million. Investors were locked out. No refunds. No recourse.
The 7 Red Flags That Mean a Project Is About to Vanish
If you’re considering investing in a new crypto project, look for these signs - not just once, but repeatedly.
- Anonymous team with no track record - Real teams have LinkedIn profiles, GitHub commits, past projects. Scammers use pseudonyms like “CryptoGuru77” or “DevTeam_X.” Dr. Garrick Hileman from Blockchain.com found that 83% of confirmed exit scams had completely anonymous teams. If you can’t find a real person behind the project, walk away.
- Unaudited smart contracts - Smart contracts are the code that runs the token. If it hasn’t been audited by a reputable firm like CertiK, OpenZeppelin, or PeckShield, treat it like a black box. In 87% of exit scams, the code was never reviewed. Audits cost $5,000-$15,000. If the team won’t pay for one, they’re not serious.
- Developer wallet holds too many tokens - Check Etherscan or BscScan. If the team’s wallet holds more than 30% of the total supply, they control the market. Professor Sarah Meiklejohn’s research shows projects like this have a 92% chance of a rug pull within 90 days. In the $SQUID case, the devs held 90%. That’s not a coin - it’s a trap.
- Unrealistic yield promises - “Earn 500% APY!” “Double your money in 7 days!” If it sounds too good to be true, it is. Legitimate DeFi projects offer 5-20% APY. Anything above 50% is a red flag. David Gerard, author of Attack of the 50-foot Blockchain, says it best: “Guaranteed high returns are a scam signal. Real innovation doesn’t need hype - it needs users.”
- Locked liquidity that’s not really locked - Some projects say their liquidity is “locked” for a year. But if the lock is controlled by the devs’ wallet (not a third-party smart contract), they can unlock it anytime. Check the lock contract on Etherscan. If it’s not verified and owned by an independent address, it’s fake.
- Social media bots, not real people - Look at the comments. Are they all “HODL!” and “To the moon!” with no questions? Are the followers growing fast but engagement is flat? Bot networks inflate numbers. A 2023 study found 71% of scam projects used fake engagement. Real communities ask hard questions. Scam communities silence them.
- No GitHub activity or copied code - Legit teams push code regularly. Check their GitHub. Are they committing 3-5 times a week? Or is the repo empty? Or worse - is the code copied from another project? Solidus Labs found scam projects often paste open-source code and call it their own. No updates. No improvements. Just a facade.
How Victims Get Trapped - And Why They Ignore the Signs
Most people don’t get scammed because they’re stupid. They get scammed because they’re human.
They see a project with a polished website, a YouTube influencer praising it, and a Discord server full of people celebrating gains. They think, “I don’t want to miss out.” They ignore the anonymous team because “everyone’s anonymous in crypto.” They skip the audit because “it’s too expensive.” They rationalize the 800% APY because “I’ve seen others make money.”
A 2023 survey of 347 victims by AML Crypto found:
- 81% ignored unrealistic ROI promises
- 63% overlooked anonymous teams
- 58% didn’t check for code audits
And then, in a matter of hours, everything collapses. Withdrawals stop. The Discord goes quiet. The website becomes a 404 error. Trustpilot ratings drop from 4.5 stars to 1.2 in 72 hours. One common review: “They disabled withdrawals without warning.”
One Reddit user saved $15,000 by checking Etherscan before investing. He saw the dev wallet held 45% of the tokens. He walked away. Two days later, the project vanished.
How to Protect Yourself - Step by Step
You don’t need to be a coder. But you do need to do your homework.
- Verify the team - Search their names on LinkedIn. Look for past projects. Check GitHub for commits over the last 6 months. If they’re truly anonymous, ask: “Why?” Satoshi Nakamoto stayed anonymous because he didn’t want fame. Scammers stay anonymous because they don’t want to be found.
- Check the audit - Go to CertiK or OpenZeppelin’s website. Search for the token. If it’s not listed, assume it’s unsecured. If it’s audited, read the report. Look for high-risk findings like “unrestricted withdrawal functions” or “admin can mint new tokens.”
- Inspect the token distribution - Go to Etherscan. Find the token contract. Look at the top holders. If the top 3 wallets hold more than 50% of supply, it’s dangerous. If the dev wallet is #1 and holds 40%+, leave.
- Test the liquidity - Use DeFiLlama or Dune Analytics. Is the liquidity locked? Who controls the lock? If the lock is tied to the dev wallet, it’s not locked. If it’s on a trusted platform like Team Finance or Team Lock, it’s safer.
- Watch the community - Join the Discord or Telegram. Ask a hard question: “Can I sell my tokens today?” If the mods delete your message or block you, that’s a warning. Real communities welcome scrutiny.
- Use scam databases - Check CryptoScamDB.org. It has over 4,800 verified exit scams. If the project is listed, don’t touch it. Also, follow the Ethereum Foundation’s Scam Alert system - they flag new threats weekly.
- Never invest more than you can afford to lose - Even if you do everything right, crypto is risky. Treat every new project like a lottery ticket. If you’re risking rent money, you’re already playing the wrong game.
The Future: Are Exit Scams Getting Harder to Pull Off?
Yes - but not because scammers are becoming honest. Because the tools to catch them are getting better.
Chainalysis and Elliptic now predict exit scams 72 hours before they happen. They track social media sentiment decay, liquidity imbalances, and wallet behavior. In Q2 2023, they flagged 94% of high-risk projects before they vanished.
Regulators are catching up too. The U.S. SEC filed 32 enforcement actions specifically targeting exit scams in 2022. The EU is pushing for stricter KYC rules on crypto exchanges. Ethereum is preparing EIP-5164 - a rule that would require new tokens to lock liquidity for at least 180 days before launch. That alone could kill half the scam projects.
Still, losses are rising. Why? Because the market is growing. More money = more targets. Juniper Research predicts crypto fraud losses will hit $7.2 billion annually by 2025.
The good news? The success rate of exit scams is falling. In 2022, 78% of scam projects pulled off their heist. By 2025, Gartner estimates that number will drop to 45%. More tools. More awareness. More consequences.
But none of that helps you if you’re the one who invested.
Final Thought: It’s Not About Being Smart - It’s About Being Careful
You don’t need to understand blockchain to avoid an exit scam. You just need to ask three questions before you invest:
- Who are these people, and can I find them?
- Is the code open and audited?
- Do they control the money?
If the answer to any of those is “I don’t know,” walk away. There are thousands of legitimate projects out there. You don’t need to chase the next moonshot. You just need to protect what you have.
The crypto world rewards patience, not greed. And the people who stay rich? They’re not the ones who made 10x. They’re the ones who never got scammed.
How do I check if a crypto project has been audited?
Go to the websites of reputable audit firms like CertiK, OpenZeppelin, or Hacken. Use their search tools to look up the token name or contract address. If it’s not listed, it hasn’t been audited. Never trust a project that says “audit in progress” - real audits are completed before launch.
Can I recover my money after an exit scam?
Almost never. Blockchain transactions are irreversible. Even if law enforcement tracks the wallet, the money is usually moved through mixers or converted to privacy coins like Monero. In rare cases, if the scammers are caught and prosecuted (like the FLiK case), you might get a small portion back - but don’t count on it.
Are all anonymous teams scammers?
No. Satoshi Nakamoto was anonymous. Some legitimate teams stay private for security reasons. But anonymity alone isn’t proof of fraud. Look for consistency: Are they active on GitHub? Do they respond to community questions? Have they been around for over a year? If they’re anonymous but transparent and active, it’s less suspicious.
What’s the difference between a rug pull and an exit scam?
A rug pull is a type of exit scam - but it’s specific to DeFi. It happens when developers drain a liquidity pool on a decentralized exchange. An exit scam is broader: it can involve fake tokens, NFTs, apps, or platforms. All rug pulls are exit scams, but not all exit scams are rug pulls.
Is it safe to invest in new tokens on decentralized exchanges?
It’s risky. DEXs let anyone launch a token with zero oversight. That’s why 87% of exit scams happen there. Only invest if you’ve done full due diligence: audited contract, verified team, locked liquidity, and realistic returns. Never buy a token just because it’s trending on Twitter.
How can I tell if social media engagement is fake?
Look at the comments. Fake accounts often have no profile picture, generic names (like “User1234”), and repetitive comments. Use tools like HypeAuditor or Social Blade to check follower authenticity. If a project has 50,000 followers but only 200 likes per post, it’s likely bot-driven.
Michael Thomas
Anonymous teams? Big deal. Every real innovator starts anonymous. You think Bitcoin had a LinkedIn page? Wake up.