What is an exit scam?
An exit scam is a fraudulent scheme in which the creators of a cryptocurrency project raise funds from investors, then cease operations and disappear with the funds they collected.
Although the term emerged alongside the development of the cryptocurrency industry, similar schemes existed long before digital assets appeared. In essence, an exit scam resembles a Ponzi scheme, where organizers collect money from participants without any intention of fulfilling their obligations.
There are no exact statistics on such crimes. However, according to analytics firm Chainalysis, losses to the cryptocurrency market from various fraudulent schemes, including exit scams, exceeded $1.3 billion in 2025.
These schemes became especially widespread in 2017 during the ICO (Initial Coin Offering) boom. The lack of clear regulation and strong investor interest enabled startups to raise tens of millions of dollars in a short period. While some teams genuinely built products and infrastructure, others intended from the outset to misappropriate the funds they raised.
How an exit scam works
Fraudsters use various segments of the cryptocurrency market to attract investments.
Exit scams are most commonly associated with projects conducting:
- ICOs (Initial Coin Offerings);
- IEOs (Initial Exchange Offerings);
- IDOs (Initial DEX Offerings);
- IGOs (Initial Game Offerings).
Such schemes are also widespread in the DeFi (Decentralized Finance) sector, which includes:
- decentralized exchanges;
- lending platforms;
- staking services (locking crypto assets in exchange for rewards);
- investment protocols and other financial services.
In addition, NFTs (Non-Fungible Tokens) are frequently used in fraudulent schemes. Project creators launch a collection, aggressively promote it to users, raise funds, and then abandon development once they achieve their financial targets.
A typical exit scam scheme
An exit scam usually unfolds according to the following scenario:
- The team creates a project website and publishes the concept, roadmap, and plans for future listings.
- An extensive marketing campaign is launched to attract investor attention.
- Digital assets are sold through the project’s own platform, centralized exchanges, or liquidity pools.
- Once the inflow of new funds declines, the organizers withdraw the assets and shut down the project.
The key difference between an exit scam and a failed startup is the presence of fraudulent intent from the very beginning. In most cases, the organizers never plan to achieve the project’s stated objectives.
Notable exit scam examples
BitConnect
One of the most well-known examples is BitConnect.
By the end of 2017, its market capitalization had reached $2.6 billion, making it one of the twenty largest cryptocurrency projects in the world.
The price of the BCC cryptocurrency increased by more than 2,500 times within a short period, rising from $0.17 to $463. This type of explosive growth later became recognized as one of the warning signs of potentially fraudulent schemes.
After the cryptocurrency market began to collapse in 2018, BitConnect’s organizers allegedly withdrew approximately $2.4 billion in assets. Following this, the price of BCC plunged by more than 99%.
Morgan DF Fintoch
The DeFi market frequently sees projects that promise exceptionally high returns while presenting themselves as affiliated with reputable financial institutions.
One such example was Morgan DF Fintoch, whose creators claimed ties to investment bank Morgan Stanley. Despite concerns raised by the crypto community, the organizers reportedly managed to withdraw around $30 million from the project.
MetaSwap
In some cases, an exit scam occurs even in projects that have operated legitimately for a period of time.
This happened with MetaSwap, an NFT trading platform. Analysts later concluded that the team had misappropriated more than $600,000 in customer assets and used the Tornado Cash cryptocurrency mixer to conceal the origin of the funds.
Why exit scams are difficult to identify
Projects in the decentralized finance sector pose a particular challenge. In their early stages, many legitimate protocols genuinely offer elevated yields to attract liquidity.
In some cases, returns may exceed 1,000% annually, making it difficult for investors to distinguish between a promising project and a future fraudulent scheme.
Additionally, some startups are launched without any intention to deceive users, but later encounter financial difficulties. As a result, their owners may abandon further development and appropriate the remaining assets.
How an exit scam differs from a rug pull
Exit scams and rug pulls both aim to seize investors’ funds. However, the mechanisms behind these schemes differ.
A rug pull is more commonly associated with decentralized finance projects. In such cases, bad actors exploit built-in smart contract functions to quickly remove liquidity or gain control over user funds.
An exit scam typically develops more gradually. The team first attracts capital, creates the appearance of active project development, and then disappears with the funds it collected.
How to recognize an exit scam
Promises of high returns
One of the most common signs of fraud is the promise of fast and exceptionally high profits. No investment instrument can consistently deliver extraordinary returns without corresponding risks.
Pressure on investors
If a team constantly urges investors to act immediately and relies on FOMO (Fear of Missing Out), it may be attempting to raise as much money as possible before disappearing.
Anonymous team
A lack of information about developers significantly increases risk. Investors cannot verify the founders’ experience, reputation, or previous projects.
No product and no independent audit
Reliable projects typically have a functioning product or at least a prototype. Independent audits of code and infrastructure provide an additional layer of credibility.
Non-transparent tokenomics
Before investing, it is important to analyze a project’s tokenomics. If an asset’s price rises too quickly without clear fundamental reasons, it may indicate artificial price inflation or preparations for a fraudulent scheme.