How to check a token before you buy — and spot a rug pull

On a social crypto app like fomo you can buy almost any token in a couple of taps. That speed is the risk: nothing checks the token for you, and because the wallet is your own, the loss is yours to keep if it collapses. This page is a short, plain checklist you can run before you buy — the same due diligence financial regulators tell crypto buyers to do, turned into steps and tied to what you can actually see on a token’s page.

What is a rug pull?

A rug pull is a scam in which the insiders who control a new token’s supply, or the pool of money backing it, suddenly sell or withdraw it — sending the price toward zero and leaving other buyers holding a token they can no longer sell. Regulators describe the same shape under an older name, the pump-and-dump. The U.S. Commodity Futures Trading Commission (CFTC) warns that in these schemes “it is the people pulling the strings who get out first … leaving everyone else scrambling to sell before losing their investment” (CFTC). It is fast: describing one real case, the CFTC notes “the buy and sell cycle was over in less than eight minutes.”

This is not a rare edge case. The U.S. Federal Trade Commission reported that since the start of 2021, “more than 46,000 people have reported losing over $1 billion in crypto to scams”, with a median reported loss of $2,600 (FTC, June 2022) — and that nearly half of those reports said the scam started on social media. You can never make a token completely safe, but you can lower the odds of buying one of the worst, and that work happens before you press buy.

How do you check a token before you buy?

Run these six checks. None needs special software; most use the token’s own page and a block explorer — a free public website that shows every wallet and transaction on a blockchain.

1. Find out who is behind it. The CFTC tells buyers to “conduct extensive due diligence on any individuals and entities listed as affiliates of a digital coin or token offering”, and adds: “If you can’t easily find information about affiliated entities or individuals, that should be a red flag” (CFTC). A token with no named, contactable team has no one accountable when it fails.
2. Check how the supply is spread across wallets. On fomo, a token’s page shows its contract address and a holder count (fomo product, as of 2026-09-10). Paste that contract address into a block explorer for the token’s blockchain and look at the largest holders. If a handful of wallets hold most of the supply, those few can sell all at once and collapse the price.
3. Make sure you can actually sell it. A token you can buy but cannot sell back is a trap. The CFTC lists “liquidity in the market for a specific digital coin or token” as a factor that affects its value; thin or withdrawable liquidity is exactly how a rug pull strands you. Before buying, confirm there is real, two-sided trading, not just a rising line on a chart.
4. Ignore social tips and sudden spikes. The CFTC is blunt: “Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes”, and “Don’t purchase digital coins or tokens because of a single tip, especially if it comes over social media” (CFTC). A token racing up a chat group or a leaderboard is often the “pump”; the “dump” comes next. Remember, too, that fomo’s public leaderboard only shows traders who are currently in profit — the people who lost money on a token do not appear on it, so a hot name there tells you nothing about your own odds (fomo product, as of 2026-09-10).
5. Distrust any promise of guaranteed gains. The CFTC says to “be especially wary of promises or guarantees of future value” and reminds buyers that “there is no such thing as a guaranteed investment or trading strategy” (CFTC). Anyone promising you a return is describing something a real, open market cannot deliver — treat it as a warning sign, not an opportunity.
6. Assume no one will refund you. On fomo your token sits in a non-custodial wallet, and fomo’s own Terms say it is “not responsible for the security or safety” of your digital assets (fomo Terms of Service §4, as of 2026-08-17). It also states it is “not registered with or licensed by any regulatory authority” (§18). So if a token collapses, the loss is yours to keep. Decide your amount on the assumption it could go to zero.

Overall, the CFTC’s summary of how to protect yourself is to “thoroughly research virtual currencies, digital coins, tokens, and the companies or entities behind them in order to separate hype from facts” (CFTC). The six steps above are how a beginner does exactly that.

What are the red flags of a rug pull?

No single sign proves a token is a scam, but the more of these you see together, the more caution is warranted.

Red flag	Why it matters	Where to look
No named, findable team	No one is accountable if the token collapses (CFTC calls a missing team a red flag)	Project site; the token’s page
Supply held by a few wallets	A handful of holders can sell at once and crash the price	Contract address in a block explorer; holder count
Thin or withdrawable liquidity	You may not be able to sell at all when you want out	The token’s market/pool data on an explorer
Promises of guaranteed value	Real markets cannot guarantee returns; it is a lure	Marketing, chat groups, ads
Hype from social tips or a spike	Insiders sell first; latecomers are left holding it	Social media; the price chart
Pressure to buy right now	Manufactured urgency is a classic scam signal	Group chats, countdown messages

Of all of these, the spread of the supply is the one worth learning to read. A token can look busy and still be controlled by a few wallets that are waiting to sell. The illustration above uses round numbers to make the point; a real token’s page and a block explorer let you check the actual figures for yourself before you commit a cent.

Where do you find this on fomo?

fomo’s per-token screens show a chart, a buy and sell panel, a holder count and the token’s contract address (fomo product, as of 2026-09-10). That contract address is the key that unlocks the rest: copy it into a block explorer for the token’s blockchain and you can see the full list of holders and how concentrated they are — information the buy button alone will never put in front of you. Because fomo lists tokens across more than one blockchain, make sure you are using the explorer for the right chain. And note the date on what you find: a token’s holders can change from one day to the next, so if you come back later, check again.

Why a rug pull hits harder on a self-custody app

With a regulated investment, a beginner might expect three things by default: an authorisation number to look up, a supervisor to complain to, and a scheme that could return some money. fomo’s Terms speak to the first of these directly — it states it is “not registered with or licensed by any regulatory authority” (§18), so there is no authorisation to look up the way there is with a regulated firm. The wallet is also non-custodial: you hold the keys, and fomo’s Terms say it is “not responsible for the security or safety” of your assets (§4). Because a self-custody wallet means you approve each transaction yourself, no one can reverse one you approved. And even a token that is not a scam can still fall to zero on its own. Checking a token lowers the odds of picking a bad one; it does not remove the risk. Before you buy anything, decide who is behind it and whether you could sell it — and size every position as money you can afford to lose in full. It is worth reading this site’s risk disclosure, and the rest of the beginner guides start at the fomo guide hub.

Frequently asked questions

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Sources

• U.S. CFTC — Customer Advisory: Use Caution When Buying Digital Coins or Tokens
• U.S. CFTC — Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes
• U.S. FTC — Reports show scammers cashing in on crypto craze (Data Spotlight, June 2022)
• fomo.family — Terms of Service §4 (non-custodial wallet) and §18 (licensing), as of 2026-08-17
• fomo.family — per-token screens showing contract address and holder count (product observed 2026-09-10)

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