How Not to Invest in a Scam Coins?

Recently many people rush to invest in the next BTC or Solana in order to make a fortune overnight. There are many cases where this actually happened in the past by investing in memecoins like Dogecoin, Shiba Inu, and many others. So the expectation isn’t completely wrong. Indeed, as a crypto expert, I think it’s very possible to invest in diverse legitimate tokens with the hope some of them go to the moon.

However, you’re not the only one who wants to make a fortune from memecoins. There are numerous professional scammers who design tricky code and hype their projects to receive your funds, lock them, and disappear, which is commonly called “rug pulls” in the crypto space!

In this article, I’ll share my own experience as a crypto developer and security analyst with a PhD in cybersecurity, on how to distinguish a real project from a scammy one.

A Brief History of Memecoins and Their Dark Side

Memecoins like Dogecoin, Shiba Inu, and HONK have become incredibly popular based on internet jokes, memes, and the communities behind them. Some skyrocket in value overnight, turning average investors into millionaires.

But there’s a troubling reality beneath the hype. Recent data from May 2025 shows memecoins made up 27.1% of all crypto interest, second only to AI tokens. The scary part? About 12% of tokens on BNB Chain and 8% of Ethereum tokens are actually designed as scams. In 2024 alone, scammers created over 117,000 fake tokens — 41% more than the previous year. These scams have cost people billions of dollars, with many losing their life savings.

What Exactly is a Rug Pull?

A “rug pull” happens when token creators suddenly vanish with investors’ money, leaving worthless tokens behind. The name evokes the image of pulling a rug from under someone’s feet, causing them to fall flat.

The typical rug pull follows a predictable pattern:

1. A programmer creates a new coin with a catchy name related to popular memes
2. They build excitement on social media, often using bots and paying for fake followers
3. People rush to buy the coin hoping it will be “the next Dogecoin”
4. Then suddenly, the creators drain all liquidity and disappear

How Scammers Steal Your Money: Technical Methods

Let me break down the technical ways these scammers operate:

Liquidity Stealing (Hard Rug Pull): I recently analyzed a token where the creator had coded a hidden function that allowed them to withdraw 100% of the trading pool funds. One Monday morning, they executed this function and instantly drained $3.2M worth of ETH, leaving thousands of investors with worthless tokens.

Honeypot Traps: Last month, a popular “moon shot” token attracted over 5,000 investors but contained code that prevented anyone except the creators from selling. When the price peaked, only the creators could cash out while everyone else watched helplessly as their paper gains evaporated.

Pump and Dump Schemes: A recent “AI memecoin” project used coordinated Telegram groups to artificially inflate its price 600% in 48 hours. Once enough buyers entered, the team sold their pre-minted tokens worth $900K and abandoned the project.

Team Disappearance: One high-profile Solana project raised $1.5M in pre-sales, launched their token, then completely vanished — deleting their Twitter, Telegram, and website overnight.

How to Spot a Memecoin Scam Before It’s Too Late

After reviewing hundreds of rug pulls, I’ve identified these major red flags:

Mystery Teams: The “PEPE Finance” project that rugged last month used AI-generated profile pictures for their entire team and provided no verifiable identities. Legitimate teams have public identities or, at minimum, proven track records under their pseudonyms.

Unlocked Liquidity: When examining token contracts, I’ve found that legitimate projects lock their liquidity for at least 6–12 months. A recent token that disappeared after three days had liquidity that could be withdrawn at any time — a massive warning sign.

Code Manipulation: While auditing a popular new memecoin, I discovered hidden functions that allowed unlimited minting of new tokens. These backdoors aren’t visible on the surface but create unlimited money printers for developers.

Market Manipulation: I tracked one token where 87% of the supply was held by just three wallets. These wallets coordinated buys and sells to create the illusion of organic trading while systematically extracting value from new investors.

How AI is Revolutionizing Scam Detection

As scammers get more sophisticated, individual investors struggle to keep up. This is where AI is changing the game. Advanced machine learning models can now:

• Analyze thousands of contracts simultaneously to detect subtle manipulation patterns
• Monitor on-chain activities to identify suspicious wallet behaviors before they impact markets
• Process social signals to differentiate between organic community growth and artificial hype

I’ve witnessed AI detection systems identify rug pulls with over 90% accuracy before they happen. In one case, an AI system flagged a highly-promoted token just hours before it rugged, potentially saving investors millions.

amirug.xyz main page

Introducing amIrug.xyz: Your AI Shield Against Scams

After seeing too many people lose their investments, I built amIrug.xyz — an AI-powered analysis tool designed to detect these scams before they happen. The platform combines my cybersecurity expertise with advanced machine learning to give investors professional-level protection.

Unlike basic token checkers that only verify contract code, amIrug.xyz conducts multi-dimensional analysis:

When we scanned a trending token last week, our system flagged suspicious transaction patterns that weren’t visible to most investors. Three days later, the token crashed 98% as the team pulled liquidity. Several users messaged us thanking us for the warning that saved their funds.

In another case, our wallet relationship analysis identified connections between a “new” project and three previous rug pulls, all operated by the same team under different identities.

Real-World Protection That Works

The results speak for themselves:

• When our system analyzed the “MoonDog” token before launch, it detected sell limitations that would have trapped investors. Those who checked with our tool avoided losing an estimated $1.2M.
• Our liquidity analysis on a farming project revealed hidden withdrawal functions that eventually led to an $800K theft attempt.
• By simulating attacks against a lending platform, we discovered a critical vulnerability that could have resulted in a $3M loss if exploited.

Why Traditional Research Methods Aren’t Enough

Even experienced investors struggle to manually verify all potential risks. Reading code requires specialized knowledge, and there are simply too many new contracts to check. Community sentiment can be manipulated through fake accounts and paid influencers. Team background checks are difficult when identities are hidden.

This is why AI-powered tools provide such value — they bring institutional-level security analysis to everyday investors. When an average trader couldn’t possibly examine complex contract interactions or track liquidity across multiple pools, AI systems can do this instantly.

How to Use amIrug.xyz to Protect Your Investments

The process is simple: before investing in any token, paste its contract address into amIrug.xyz for an instant risk assessment. The system provides an overall safety score and highlights specific concerns across multiple categories.

You can also scan tokens you already own to check for developing issues, as some rug pulls occur weeks after launch once sufficient liquidity has built up.

Building a Safer Crypto Ecosystem Together

While tools like amIrug.xyz provide powerful protection, creating a safer crypto world requires collective effort. Share knowledge, report suspicious projects, and support transparency through security audits and verification.

Remember: in the exciting but dangerous world of memecoins, your best defense combines technology, knowledge, and a healthy dose of skepticism. If something seems too good to be true, it probably is.

Disclaimer: This article is for information only and not investment advice. Always do your own research before investing in any cryptocurrency.

Am I Rug? — Cryptocurrency Smart Contract Security Scanner
Free blockchain security scanner for detecting rug pulls and vulnerabilities in memecoin smart contracts.