Shariah Perspective

From a Shariah perspective, both hard and soft rug pulls are considered unethical due to their fraudulent nature, violating essential Islamic principles such as honesty, transparency, and the prohibition of unjust enrichment.

Hard Rug Pulls

Hard rug pulls are characterized by a clear intent to deceive investors. This type of fraud is strictly prohibited in Islam as it violates the principles of adl (justice) and amanah (trustworthiness). Engaging in such fraudulent activities is haram (forbidden) because it involves exploiting others and causing them financial harm. Based on the Quran in Surah Al-Baqarah:

وَلَا تَأۡكُلُوٓاْ أَمۡوَٰلَكُم بَيۡنَكُم بِٱلۡبَٰطِلِ

Meaning: And do not consume one another's wealth unjustly or send it [in bribery] to the rulers so that [they might aid] you [to] consume a portion of the wealth of the people in sin, while you know [it is unlawful]. 

[Surah al-Baqarah: 188]

Soft Rug Pulls

Although soft rug pulls may not always be illegal, they are still unethical from the perspective of Islamic finance for several reasons:

• Unethical Practices: Gradually selling tokens to profit at the expense of investors demonstrates a lack of transparency and honesty, violating Islamic ethical obligations.
• Speculative Nature: Soft rug pulls often exploit speculative trading, which is discouraged in Islam. Such practices are volatile and can result in significant financial harm.
• Potential for Harm: Even though soft rug pulls may be more subtle than hard rug pulls, they still cause financial harm to investors, contradicting the Shariah principle of Hifz Maal (protection of wealth).

In Islamic jurisprudence axioms, it states: 

الأصل في جميع العقود العدل

Meaning: The Fundamental Requirement In Every Contract Is Justice

This principle aims to ensure justice and fairness in financial contracts, protecting the rights of all parties. Even if a transaction technically complies with Shariah, it cannot be considered truly Islamic if it results in unfairness or harm to any party.

Since the primary objective of Shariah is to protect individuals from harm and promote their welfare, soft rug pulls, despite being more covert, are still harmful to the community. These practices undermine trust and fairness, causing damage to investors, and are therefore incompatible with Shariah principles.

Conclusion

Both hard and soft rug pulls are haram (Prohibited) due to their fraudulent nature, deception, and the harm they cause to investors. These practices violate key Islamic principles of trust, fairness, and the prohibition of unjust enrichment. Additionally, the speculative nature of rug pull is discouraged in Islam. Developers should ensure transparency and ethical conduct in their projects, while investors must exercise caution and thoroughly verify the legitimacy of any project to avoid fraud. Ethical and fair practices are essential for Shariah compliance.