How to Avoid Memecoin Scams

Posted by ZEECH on





Avoiding scams in the memecoin space requires a keen eye for red flags, due diligence, and strategic research. Here are some essential, in-depth tips to protect yourself from rug pulls, pump-and-dump schemes, and fraudulent projects.

1. Check the Liquidity & Trading Volume

One of the biggest indicators of a scam is low liquidity or manipulated trading volume.

What to look for:

  • A legit memecoin should have locked or renounced liquidity, meaning developers can’t suddenly pull funds and disappear.
  • Beware of sudden spikes in trading volume followed by massive dumps—this indicates a pump-and-dump scheme.
  • Use DEX tool like Dextools and GeckoTerminal to check the liquidity pool.

Red Flags:

  • Liquidity that isn’t locked for at least 6-12 months.
  • Liquidity controlled entirely by the dev team with no transparency.
  • Abnormal buy-to-sell ratio, where most trades are only buys (potential wash trading).

2. Analyze the Smart Contract on Blockchain Explorers

A scam token often has hidden functions in its smart contract that allow the developer to manipulate the token price, block sales, or drain liquidity.

What to look for:

  • Check the token’s contract on Etherscan (Ethereum), BscScan (Binance Smart Chain), or Solscan (Solana).
  • Look for contracts that have been verified and audited (CertiK, SolidProof, or Hacken audits are good indicators). 
  • Review if the contract has a renounced ownership—meaning developers can’t modify or rug the project.

Red Flags:

  • High tax fees (over 10%) on buys and sells, making it hard to exit your position.
  • A function that allows the devs to disable selling (common in honeypot scams).
  • A “mint” function that allows the team to create unlimited tokens and dilute the value.

Use websites like Tokensniffer.com or Rugcheck, to scan a contract for hidden risks.

3. Investigate the Team & Community

A legitimate memecoin project will have a transparent team and a strong, active community.

What to look for:

  • Publicly known developers with a track record in crypto.
  • A strong Twitter, Telegram, and Discord presence with real, active users.
  • Team members who engage with the community and provide updates regularly.

Red Flags:

  • Anonymous devs who refuse to reveal their identities.
  • A Telegram full of bot-generated messages rather than real conversations.
  • Admins banning users who ask legitimate questions about the project.

4. Look at the Token Distribution

A fair launch is crucial for a memecoin’s success. If a few wallets control most of the supply, it’s a major risk.

What to look for:

  • Use Etherscan or BscScan to check the top wallet holders.
  • The top 10 holders should not control more than 20-30% of the total supply.
  • A large portion of tokens should be distributed among thousands of wallets, not just a few insiders.

Red Flags:

  • A single wallet holding more than 50% of the supply (devs could dump anytime).
  • Unexplained token burns that don’t benefit the community but make it look like supply is shrinking.
  • More than 20% - 25%+ of the supply are held by the top ten holders (Everyone has a different percentage where they won't buy. Some are 15% or more, some are higher)


5. Beware of Fake Social Media Hype & Paid Promotions

Scammers use influencers and fake social media accounts to pump their memecoins before dumping on retail investors.

What to look for:

  • Real engagement on Twitter, Telegram, and Discord (not just generic hype comments).
  • Organic marketing with partnerships rather than suspicious influencers shilling.
  • Developers who are transparent about funding, marketing, and partnerships.

Red Flags:

  • A new memecoin suddenly trending on Twitter but has no real use case. This does not always mean it is a scam, as this is pretty much what a memecoin is haha! Always be careful though.
  • Paid influencers making over-the-top price predictions (“1000x soon!”).
  • Fake news or forged partnerships with big companies. Always verify from official sources!

6. Rug Pull Prevention: Check for Locked Liquidity & Dev Wallets

Most rug pulls happen because developers own too many tokens and suddenly dump them.

What to look for:

  • Liquidity should be locked for at least 6-12 months.
  • No “dev wallet” holding more than 10% of the total supply.
  • Smart contract renounced ownership, meaning devs can’t change tokenomics later.

Red Flags:

  • Unlocked liquidity, which means the devs can withdraw funds and disappear.
  • The project claims to be “fully decentralized” but a single wallet holds most tokens.
  • Devs start selling large amounts of tokens while claiming to “raise funds.”

7. Trust Your Gut & Avoid FOMO

The biggest reason people fall for scams is fear of missing out (FOMO). If a memecoin is making insane claims, it's probably too good to be true.

What to do instead:

  • Take time to research before investing.
  • Set stop-losses and exit strategies to minimize risks.
  • Never invest more than you can afford to lose—memecoins are volatile!

Red Flags:

  • The classic “get in before it’s too late” marketing strategy.
  • Projects with no clear roadmap or real-world use case.
  • Devs promising unrealistic gains (“1000x guaranteed!”).

Memecoins can be profitable, but they also attract bad actors looking to scam investors. By following these security tips, you can protect your investments and avoid falling for pump-and-dump schemes or rug pulls.

Remember to always do your own research before jumping in! Stay safe out there everyone!

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