What is a Crypto Rug Pull and How does it Work?

What exactly is a rug pull in crypto?
A rug pull is a type of crypto scam that occurs when a team pumps their project’s token before disappearing with the funds, leaving their investors with a valueless asset.

Rug pulls happen when fraudulent developers create a new crypto token, pump up the price and then pull as much value out of them as possible before abandoning them as their price drops to zero. Rug pulls are a type of exit scam and a decentralized finance (DeFi) exploit.