An exit scam or rugpull is a type of fraud in which the operators of crypto scheme abscond with investor money or crash an ililquid market resulting in a net transfer of public funds to a cartel of insiders.
The anonomous nature of many defi projects means these types of fraud are frequent and difficult to trace or prosecute by law enforcment.
See also securities law and KYC requirements.
- Petro, Louis W., James P. Martin, Adam A. Wadecki, and Harry Cendrowski. The handbook of fraud deterrence. John Wiley & Sons, 2007.