Risks & Security
Exit Scam
Founders disappearing with investor money after fundraising
Definition
An exit scam is when project founders disappear with investors' money after raising funds, either through ICOs, presales, or by draining protocol treasuries.
Example
A project raises $10M through token sales, then founders delete social media accounts and transfer all funds to personal wallets.
What to check
Treat it as a risk term: identify the failure mode, who can be harmed, and what evidence would reduce that risk. The main checks are: Complete fund loss; No recovery options; Damaged ecosystem trust.
Risks to Consider
- Complete fund loss
- No recovery options
- Damaged ecosystem trust
Common Questions
What does Exit Scam mean in DeFi?
Exit Scam means Founders disappearing with investor money after fundraising. The useful question is not only the definition, but how the mechanism changes risk, return, liquidity, or governance for the user.
How is Exit Scam used in practice?
A practical example: A project raises $10M through token sales, then founders delete social media accounts and transfer all funds to personal wallets.
What should I check before relying on Exit Scam?
Check complete fund loss, no recovery options, damaged ecosystem trust. Also verify liquidity, oracle assumptions, admin controls, and whether the protocol has been tested during stressed markets.
