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Celebrity coins and memecoin rug pulls
A memecoin rug pull is when the people behind a token, often holding most of its supply, drive up the price with hype and then sell everything at once, collapsing the price and leaving buyers with near-worthless coins. A celebrity name attached to the launch is marketing, not a safety check; endorsers are frequently paid and rarely liable for your loss. In early 2025 the LIBRA token, promoted by a sitting head of state, collapsed roughly 95 percent within hours. Before buying any hyped token, check who holds the supply and whether you can actually sell.
What a rug pull actually is
A "rug pull" is the crypto name for a simple old fraud: the people who create and control a token hype it up, let the public pour money in, and then pull out everything of value, the liquidity, their own holdings, or both, leaving everyone else holding a coin that is suddenly worth almost nothing. The rug is pulled out from under the buyers.
Memecoins, tokens with no product or purpose beyond a joke, a theme, or a famous name, are fertile ground for this because their entire value is sentiment. There is nothing underneath to put a floor under the price, so when the insiders leave, there is nothing left.
It is worth being precise: not every memecoin is a deliberate rug pull, and many that collapse were simply speculative bets that failed rather than fraud. But the structure of these launches makes rug pulls easy and common, and for a buyer the practical risk is similar either way.
How the rug pull unfolds
The pattern is consistent enough to recognise in advance.
Hype creates urgency. A launch is announced, often with a famous name attached, a celebrity, an influencer, in one case a national president. A post or livestream drives attention, and the message is always "now", before you miss it.
Buyers pour in. FOMO, the fear of missing out, does the work. The price spikes as new money arrives, which attracts more money, which looks like proof it is working.
Insiders hold most of the supply. Behind the scenes, a small number of wallets, the creators and their allies, hold a large share of the tokens, bought or allocated cheaply before the hype.
They dump. At the peak, the insiders sell their holdings, or remove the liquidity that let anyone trade at all. The price collapses in minutes to hours.
The public holds the bag. Latecomers are left with tokens they often cannot even sell, at a fraction of what they paid.
The LIBRA example
In February 2025, a token called LIBRA launched on the Solana network and was promoted in a post by Javier Milei, the President of Argentina. The attention drove a rapid spike, and then an equally rapid collapse, reportedly around 95 percent within hours, as early holders exited. It wiped out large sums from people who bought in on the hype, and it generated lawsuits and serious political fallout, including calls for the president's impeachment over his promotion of it.
The lesson is not about one politician. It is that the most prominent possible endorsement did nothing to protect buyers, because the endorsement was never the thing that made it safe or unsafe. The supply structure was.
Why a celebrity name means little
This is the part worth internalising, because it runs against instinct. A famous person promoting a coin feels like validation. It is not.
Celebrity and influencer promotions are frequently paid, and the promoter often has tokens of their own to sell into the attention they create. The US Securities and Exchange Commission has warned investors directly that a celebrity endorsement does not mean an investment is legitimate or legal, and has penalised several public figures for promoting crypto tokens without disclosing they were paid to. A famous face tells you the launch could afford a famous face. It tells you nothing about who holds the supply or whether you will be able to sell.
What to check before you buy
If you choose to engage with this high-risk corner of crypto, a few checks separate a somewhat fairer launch from an obvious trap. This builds on our broader guide to verifying a crypto project.
Who holds the supply. Block explorers and token-analysis tools show holder distribution. If a handful of wallets hold most of the tokens, their exit is the whole market, and you are buying their way out.
Whether you can sell. Some rug-pull tokens are built so that buying works but selling is blocked or taxed into the ground, a "honeypot." Check that selling is actually possible before you put in anything you cannot lose.
Whether liquidity is locked. If the creators can withdraw the trading liquidity at any moment, they can end the market whenever they choose. Locked liquidity is a weaker guarantee than it sounds, but its total absence is a clear warning.
Who is really behind it, beyond the famous name. The celebrity is the marketing. Who created the token, and what do they hold? Anonymous teams plus heavy promotion is the classic setup.
Your own expectations. Even absent fraud, memecoins are among the most speculative things you can buy, and most go to zero. Never put in money you are not fully prepared to lose, and treat any "guaranteed" or "can't lose" framing as the lie it is.
If you have already been caught
On a public blockchain, a completed trade cannot be reversed, and tokens left worthless after a rug pull are generally not recoverable. Preserve the details, the token, the wallets, the promotion, the timeline, and report it; where a known promoter or team was involved, reports to the SEC and FTC do feed enforcement. Our evidence checklist covers what to keep.
And treat any offer to recover your losses for a fee as a second scam. Collapsed-token losses cannot be reversed by a paid service.
Red flags
- A token whose main selling point is a celebrity or influencer name
- Intense urgency: buy now, before it moons, limited window
- A small number of wallets holding most of the supply
- Inability to sell, or a punishing tax when you try
- Trading liquidity the creators can withdraw at will
- Anonymous creators behind heavy, paid-looking promotion
- Any promise that the token can only go up
What this guide cannot do
It cannot tell you which specific token will rug and which will merely be a bad bet, and it cannot recover money already lost to one. What it can do is replace the false comfort of a famous name with the checks that actually matter, who holds the supply and whether you can sell, and set honest expectations for a corner of crypto where most tokens end at zero. Those two checks, plus money you can afford to lose, are the realistic defence.
This is general information, not financial advice. Nothing here is a recommendation to buy or avoid any particular asset.
Use Chain Pursuit's free tools to think through a token before you buy and to identify possible scams. Do not share your seed phrase or private keys with anyone.
Sources
US Securities and Exchange Commission, Celebrity Endorsements (Investor Alert). https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_celebrity, source for the warning that a celebrity endorsement does not mean an investment is legitimate or legal, and that endorsers may be paid.
Cointelegraph, Javier Milei Risks Impeachment Over $107M LIBRA Rug Pull. https://cointelegraph.com/news/javier-milei-risks-impeachment-107-m-libra-rug-pull, reporting on the February 2025 LIBRA launch, its promotion, its rapid collapse, and the legal and political fallout. Figures are as reported.
Federal Trade Commission, What To Know About Cryptocurrency and Scams. https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams, on verifying who is behind a token, searching for scam reports, and that only scammers guarantee returns.
Memecoins are highly speculative and most lose most or all of their value even without fraud; this page distinguishes that ordinary risk from deliberate rug pulls. Reviewed quarterly.
Frequently asked questions
What is a rug pull?
It is when the people who control a token hype it, let the public buy in, then sell their large holdings or remove the trading liquidity all at once, collapsing the price. Buyers are left holding a token worth almost nothing, often one they cannot even sell. It is especially common with memecoins, whose value is pure sentiment.
Does a celebrity promoting a coin make it safe?
No. Celebrity and influencer promotions are frequently paid, and the promoter often holds tokens to sell into the attention. The SEC has warned that an endorsement does not mean an investment is legitimate or legal, and has fined figures for undisclosed paid promotion. A famous name is marketing, not a safety check.
What happened with the LIBRA token?
In February 2025, LIBRA launched on Solana and was promoted by Argentina's president. The hype drove a fast spike and then a collapse of roughly 95 percent within hours as insiders exited, wiping out many buyers and triggering lawsuits and calls for impeachment. The high-profile endorsement did nothing to protect buyers.
How can I check if a token is likely a rug pull before buying?
Check who holds the supply using a block explorer; if a few wallets hold most of it, their exit is the market. Confirm you can actually sell, not just buy, to avoid a honeypot. See whether liquidity is locked, and look past the famous name to who really created it. Concentrated supply plus heavy promotion is the classic trap.
What is a honeypot token?
A token designed so that buying works but selling is blocked or taxed so heavily you cannot get out. It looks like a rising asset while trapping your money. Before putting in anything meaningful, confirm that selling is actually possible, which tools and small test trades can help reveal.
Are all memecoins scams?
No, but the category is extremely high-risk, and most memecoins lose most or all of their value even without fraud. A rug pull is the deliberate-fraud subset. For a buyer the practical outcome can look similar, so only ever use money you are fully prepared to lose, and ignore any "can't lose" framing.
Can I get my money back after a rug pull?
Usually not. A completed trade on a public blockchain cannot be reversed, and worthless tokens are generally unrecoverable. Preserve the evidence and report it, since reports involving known promoters can feed enforcement. Treat any paid "recovery" offer as a second scam, because collapsed-token losses cannot be reversed for a fee.
Why does urgency show up in every one of these?
Because the scheme depends on new money arriving before the insiders exit. "Buy now, before you miss it" exists to stop you checking who holds the supply and whether you can sell. A launch that cannot survive a few minutes of scrutiny was built not to be scrutinised.
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