Is a new cryptocurrency coin or token launch a good investment?
New coin launches carry extremely high fraud risk — rug pulls and pump-and-dump schemes are common and most new tokens fail or disappear.
Last reviewed: 1 June 2026
Explanation
Initial coin offerings (ICOs) and new token launches are frequently used to conduct rug-pull fraud. Promoters create a new token with slick branding and community hype, raise investment from buyers, and then abandon the project or withdraw all liquidity — leaving investors with worthless tokens. Even legitimate new tokens carry enormous speculative risk. High-profile promotions on social media and endorsements by influencers or celebrities are common in both fraudulent and speculative legitimate launches. Never invest more than you can afford to lose entirely, verify the development team's real-world identities, and check whether the code has been independently audited.
Common red flags
- Promoted exclusively on social media with celebrity or influencer backing
- Development team anonymous or unverifiable
- Promises of extraordinary returns in a short period
- No independent code audit from a credible security firm
What to do now
- Research the team's identities and track record independently
- Check for an independent smart contract audit by a credible firm
- Treat all speculative crypto as high-risk — never invest money you cannot afford to lose
- Report suspected rug-pull projects to your financial regulator
Frequently asked questions
What is a rug pull?
A rug pull occurs when a crypto project's developers withdraw all liquidity from the project, making the token worthless, and disappear with the raised funds.