Dechat, an open-source Web3 communication protocol for decentralized user interactions, has erroneously linked to a honeypot PancakeSwap pool in its official token launch announcement on Feb. 26.
“You clowns literally linked a honeypot for your own token launch,” wrote pseudonymous on-chain researcher ZachXBT in a Feb. 26 X post. A honeypot crypto scam refers to a malicious smart contract with hidden traps that aims to attract user investments before stealing the funds.
You clowns literally linked a honeypot for your own token launch. pic.twitter.com/ioUYRryMuR
— ZachXBT (@zachxbt) February 26, 2024
Following ZachXBT’s revelation, Dechat deleted the initial post and shared a new announcement with an amended PancakeSwap link. The protocol’s new utility token, DECHAT, was launched for trading on Feb. 26. The coin has been listed on KuCoin, Bybit, Gate.io, HTX, MEXC and PancakeSwap exchanges.
Cointelegraph has contacted Dechat for comment.
The error led to widespread community criticism. Pseudonymous X user Varun4243 claimed to have lost funds due to Dechat’s erroneous honeypot link. He wrote:
“You guys posted the wrong contract address and link for Pancakeswap!! I lost money because of that!! Will you compensate me for that?”
Honeypot crypto scams are a growing concern
Honeypot scams are a growing concern due to their rapid deployment. The creation of a new honeypot contract by a single malicious actor can take as little as 30 minutes, according to blockchain security firm CertiK.
The Squid Game honeypot token scam in November 2021 was among the most famous examples of this fraudulent mechanism. The developers of the SQUID honeypot token managed to steal approximately $6.38 million worth of untraceable BNB (BNB), which was moved through cryptocurrency mixer Tornado Cash.
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The token saw significant inflows as it was riding on the hype created by the hit Netflix series Squid Game. The fraudulent projects generated interest despite clear red flags, such as the inability of holders to sell their tokens, which was branded as an “innovative anti-dumping technology.”
Honeypot contracts usually aim to attract unsellable user funds because the contract’s sell function is disabled. The malicious actor withdraws the investor funds once sufficient users have fallen for the scam.
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