Exit scam: signs, schemes, and protection methods

The anonymity and decentralization of digital assets make them highly attractive to fraudsters, as cryptocurrency transactions, unlike bank transfers, cannot be stopped or reversed. This is why exit scams and other forms of crypto fraud remain a serious problem for investors.

What is an exit scam?

An exit scam is a type of fraudulent scheme in which the creators of a cryptocurrency project disappear after taking investors' assets. This is where the term "exit scam" originates.

The term "exit scam" became widespread with the emergence of the digital asset market, where such fraudulent schemes are particularly easy to execute. However, similar schemes existed long before the cryptocurrency market. For example, Ponzi schemes can be considered an early form of fraud that closely resembles an exit scam in terms of how it operates.

There are no precise statistics on exit scams. However, according to blockchain analytics company Chainalysis, fraudulent schemes, including exit scams, caused more than $1.3 billion in losses to the cryptocurrency market in 2025 alone.

Exit scams became especially widespread in 2017 during the ICO (Initial Coin Offering) boom.

The lack of regulation and investor enthusiasm driven by the success of early cryptocurrency pioneers led to the emergence of hundreds of projects that quickly attracted tens of millions of dollars in investment with little effort. Such an environment became fertile ground for the spread of exit scams.

While some projects genuinely used the funds they raised for development, others carried out exit scams by simply appropriating investors' assets and leaving them with worthless cryptocurrencies, often referred to as "shitcoins".

How does an exit scam work?

An exit scam can be associated with various types of cryptocurrency projects, including:

Projects launched through public token sales, which are often used to facilitate exit scams:

• ICO (Initial Coin Offering);
• IEO (Initial Exchange Offering);
• IDO (Initial DEX Offering) on decentralized exchanges;
• IGO (Initial Game Offering) and others.

Protocols in the DeFi (Decentralized Finance) market can also be used to organize exit scams:

• Decentralized exchanges;
• Lending platforms;
• NFT (Non-Fungible Token) marketplaces;
• Staking platforms and other yield-generating services and others.

NFTs (Non-Fungible Tokens)

Fraudsters may promote unique digital assets and later disappear with the funds they collect, abandoning the project and committing an exit scam.

The exit scam scheme consists of several stages:

1. First, the team announces its project. The creators publish a website that describes the project and outlines plans for future listings. The more information available on the website, the more legitimate the project appears to investors, increasing the effectiveness of a future exit scam.
2. Next, the team actively promotes the project and conducts public token sales through its own website, exchange platforms, or liquidity pools on decentralized exchanges to raise funds, thereby preparing the ground for a potential exit scam.
3. If the inflow of new investor funds stops or declines significantly, the team withdraws liquidity and appropriates the assets, thereby carrying out the exit scam.

What distinguishes an exit scam from an ordinary failed cryptocurrency project is that the team usually intends to deceive investors from the very beginning.

One of the most prominent examples of an exit scam is BitConnect. At the end of 2017, during the ICO boom, BitConnect's market capitalization reached $2.6 billion, placing it among the twenty largest projects in the cryptocurrency industry.

Due to the influx of new investors, the value of the platform's native cryptocurrency, BCC, increased more than 2,500-fold — from $0.17 to $463. Such explosive growth later became one of the characteristic features of many exit scams.

During the 2018 cryptocurrency market crash, the BitConnect team carried out an exit scam, withdrawing approximately $2.4 billion in assets. Following the exit scam, the value of BCC plummeted by more than 99% within a short period.

Financial pyramids disguised as decentralized protocols and promising high returns are often exit scams. The danger of such projects lies in the fact that, during their early stages, they can be difficult to distinguish from legitimate DeFi protocols.

This is because genuine decentralized protocols often offer exceptionally high yields shortly after launch in order to attract liquidity. These returns can sometimes exceed 1000% annually. As a result, a potential exit scam can be difficult to identify in its early stages.

One such example is the DeFi protocol Morgan DF Fintech, which falsely presented itself as a project affiliated with Morgan Stanley. The crypto community quickly suspected the project of being an exit scam, but the organizers of Morgan DF Fintech still managed to withdraw approximately $30 million.

It should be noted that even projects that initially operate honestly can eventually turn into exit scams after a series of setbacks. In such cases, instead of continuing to develop a "doomed" project, the founders simply run an exit scam and withdraw any remaining assets that have not yet been spent.

For example, the NFT trading platform MetaSwap was once a functioning marketplace. However, analysts later exposed it as an exit scam. Experts discovered that the MetaSwap team had misappropriated more than $600,000 worth of client assets and laundered the funds through the Tornado Cash mixer.

How does an exit scam differ from a rug pull?

Although exit scams and rug pulls share certain mechanics, there are important differences between them.

A rug pull is primarily associated with the DeFi market. In such schemes, fraudsters typically exploit intentionally built-in vulnerabilities in smart contracts to rapidly drain liquidity.

An exit scam, on the other hand, is most commonly associated with public token sales and fundraising activities.

How can you identify an exit scam?

The first and most common sign of an exit scam is the promise of quick, guaranteed, high returns. This is one of the most common indicators of fraudulent schemes because the prospect of high profits attracts investors quickly.

However, over time, unsustainably high returns usually lead to either a collapse in asset prices or an exit scam, as it is impossible to maintain them indefinitely.

Investors should also pay close attention to a project's marketing strategy, as it may reveal signs of an exit scam. If the team strongly emphasizes the need for quick investment decisions and attempts to trigger FOMO (Fear of Missing Out), this may indicate preparations for an exit scam.

Another clear sign of an exit scam is an anonymous team. In many cases, efforts to conceal the real identities of team members may indicate an intention to carry out an exit scam from the outset.

The absence of a real product and independent audits is another important warning sign. Audits are often the only reliable way to verify the legitimacy of a product, assuming one actually exists.

In addition, investors should evaluate the transparency of a project's tokenomics and monitor the performance of its asset. For example, if a cryptocurrency's price rises too rapidly without any fundamental reasons, this may be a sign of an exit scam.