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What Is a “Rug Pull” and How Does It Relate to Counterparty Risk?

Developers abruptly drain a project's liquidity, stealing user funds; it is a direct result of trusting a malicious human counterparty.
Greeks.Live22.11.25

What Is a “Rug Pull” and How Does It Relate to Counterparty Risk?

A rug pull is a malicious maneuver where developers of a cryptocurrency project abruptly drain all the liquidity from a decentralized exchange (DEX) pool, effectively cashing out and abandoning the project. It is a severe form of counterparty risk, as users trusted the developers to maintain the liquidity and project, only to have their funds stolen due to the developers' malicious intent.

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