Exit Fraud
Also known as: Crypto Exit Scam, DeFi Rug Pull, Protocol Fraud
A deceptive practice where a crypto platform or project disappears with user funds, typically after building trust.
Exit fraud occurs when a cryptocurrency platform, dApp, exchange, or project suddenly shuts down and absconds with users' funds, often after a period of normal operation. It's a type of scam that can affect ICOs, NFT marketplaces, DeFi protocols, and centralized services. Operators gain trust through marketing or early success before executing the 'exit'. Unlike hacks, exit frauds are internal betrayals. Red flags include anonymous teams, unaudited smart contracts, and unsustainable returns. Rug pulls are a common example of exit fraud in DeFi.