How Do Decentralized Exchanges (DEXs) Facilitate Rug Pulls?
DEXs allow anyone to create a token and pair it with a base currency in a liquidity pool without central oversight or vetting. This ease of listing, often without KYC, provides a perfect environment for scammers to quickly launch a token, attract funds, and then execute a rug pull by removing the liquidity they initially provided.
The lack of regulatory barriers is the key enabler.
Glossar
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.
Regulatory Barriers
Constraint ⎊ Regulatory barriers within cryptocurrency, options trading, and financial derivatives represent legal and administrative impediments impacting market participation and innovation.
Centralized Exchanges
Exchange ⎊ Centralized exchanges (CEXs) represent a critical infrastructure within cryptocurrency markets, facilitating order matching and settlement for a diverse range of digital assets, including options and derivatives.