Honey Pots: A Sticky Crypto Scam Story
If someone hears the term “honeypot”, they may immediately conjure images of Mata Hari and highly seductive spies who utilize romantic relationships or one-night stands to pilfer sensitive information from countries or corporations!
And applied to crypto, it would mean that people will seduce your crypto away from your wallet, right?
Although both share the strategy of dangling an irresistible offer in front of a future victim, and both leave devastation in their wake, they are nothing alike.
Want to know about the honey trap scams that have been plaguing web3?
Dig in our article!
A “Honey Pot” scam in the world of cryptocurrency refers to a type of fraudulent scheme where scammers set up a fake project or cryptocurrency with the aim of attracting unsuspecting investors.
The scam typically involves creating a new cryptocurrency or project with a website, whitepaper, and social media presence, all designed to look legitimate.
The scammers then promote the project heavily through various channels, such as social media,especially Telegram and Reddit, and email marketing campaigns.
Once they have gained the trust of enough investors, the scammers may then disappear with the funds raised, leaving investors with worthless tokens or no tokens at all.
Honeypot scams can be established in various ways, including the creation of fabricated cryptocurrency exchanges or wallet services that advertise lucrative deals or incentives.
These fraudulent services entice victims by promising them easy profits, and then encourage them to divulge their personal information and transfer cryptocurrency to the honeypot.
It can also involve the promotion of false cryptocurrency investment schemes. Fraudsters advertise high returns and encourage potential investors to entrust their assets to their fraudulent scheme. After the victim has invested their assets, the scammer disappears, and the victim is left without receiving any returns.
In some cases, the scammers may also use fake trading bots or other tools to manipulate the market and drive up the price of the tokens, before selling them off and making a profit!
In 2022, the most popular type of scam token was a “honeypot,” which is a token smart contract that doesn’t allow buyers to resell!
In the last week of March 2023 alone, no less than 3 Honey Pot scams were uncovered by Certik: DEAT Token, Finance (ARKEN) and BWR Token. Where the “founders” bagged at least $200k!
The most lucrative ever reported was the Squidgame Honeypot in 2021, that amounted to $5.7M!
To avoid falling victim to a Honey Pot scam, investors should always do their due diligence before investing in any new cryptocurrency or project. This includes researching the team behind the project, reviewing the whitepaper and other materials, and looking for any red flags or warning signs that the project may not be legitimate.
Additionally, investors should be cautious of any project that promises unrealistic returns or uses high-pressure sales tactics, these are the biggest red flags!
Stay Safe!
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