Honeypot scams generally prevent buyers from selling tokens
According to an alert issued by blockchain security firm PeckShield, Snowflake Floki, an imitation of the Floki Inu meme currency, is a honeypot scam.
– PeckShieldAlert (@PeckShieldAlert) December 28, 2021
As the name suggests, a cheat tricks users into buying tokens while disabling the ability to sell them. Buyers’ money gets stuck in the contract as all withdrawals are disconnected. Scammers typically blacklist all other wallets in addition to their own.
This type of scam is not new. Ethereum users have been dealing with honeypots during years. Since Binance Smart Chain is much cheaper to issue tokens, such scams became a common occurrence on the popular smart contract blockchain.
Floki Snowflake he started on PancakeSwap, a decentralized platform powered by Binance Smart Chain, on Monday, and some followers instantly noticed the red flag.
Now there is an easy way to detect honeypots, although not foolproof. TO honey detector simulates a purchase and sale transaction in order to determine whether a certain cryptocurrency project is a scam or not.
In late October, a token inspired by Squid Game, Netflix’s hit survival drama series, made headlines in mainstream media after its price soared by a whopping 40,000% in no time. However, there was a problem: buyers were unable to sell it due to the built-in “anti-dumping mechanism” that played a key role in the token’s price inflation. Unsurprisingly, the token ended up being a scam that defrauded buyers of millions of dollars.
Many unscrupulous actors are also trying to capitalize on legitimate meme coins like Floki Inu and Shiba Inu.