Dechat's Misstep: Erroneous Honeypot Link in Token Launch Sparks Crypto Scam Concerns
Summary:
Dechat, a Web3 communication protocol, mistakenly linked to a deceptive PancakeSwap pool in its token launch announcement, leading to widespread criticism. The mix-up was spotted by on-chain researcher, ZachXBT. After this, Dechat released a new announcement with the correct link. The incident highlighted wider concerns about the growing prevalence of "honeypot" scams in the crypto world, which involve malicious smart contracts designed to lure in and then defraud investors. One well-known example of such a scheme was the Squid Game token scam, which successfully stole approximately $6.38 million worth of cryptocurrency.
On February 26, Dechat, a protocol allowing communication across Web3 interfaces decentralizedly, made a mistaken announcement by providing a link to a deceptive PancakeSwap pool during their token offering. An on-chain investigator operating under the pseudonym ZachXBT pointed out, “Foolishly, a trap was provided as a link for your own token's introduction." In the crypto world, a honeypot scam refers to a harmful smart contract that contains concealed pitfalls, designed to attract and then swindle investors' money.
In the wake of ZachXBT revealing this blunder, Dechat removed the original post and put up a new announcement with the correct PancakeSwap link. The new utility token of Dechat, called DECHAT, was introduced to the market on the same day, February 26, and has been listed on several exchanges such as KuCoin, Bybit, Gate, HTX, MEXC, and Pancakeswap. Dechat has been reached out to by Cointelegraph for a comment.
Because of this mistake, the community has voiced sizable criticisms. A user named Varun4243, who chose to remain unidentified, alleged to have lost money due to the faulty honeypot link supplied by Dechat, and demanded compensation from the company.
The rapid increase of honeypot scams serves as a growing issue in the crypto sphere. As per CertiK, a firm specializing in blockchain security, it can take an individual with harmful intentions as short as 30 minutes to set up a new honeypot agreement.
One of the most notorious instances of a honeypot scam was the Squid Game token fraud in November 2021. The creators of the $SQUID honeypot token managed to amass and withdraw an untraceable sum of about $6.38 million in BNB, achieved through a crypto mixer called Tornado Cash.
The token saw substantial investments despite obvious signs of foul play due to the buzz generated by the popular Netflix show, Squid Games. These scam projects can nonetheless draw interest, even with glaring red flags like being unable to sell their tokens, a feature touted as “revolutionary anti-dump technology.”
Honeypot agreements principally look to gather non-saleable user funds by disabling the contract’s sell function. Once enough users have been duped, the perpetrator withdraws the invested money.
Published At
2/26/2024 3:44:25 PM
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