How to Avoid Crypto Honeypot Scam, Here are the Characteristics!

Bittime - Fraud in the crypto world is increasingly diverse. One of the most common tricks used by scammers is deception crypto honeypot scam. 

For both novice investors and experienced traders, recognizing these signs of fraud is very important so as not to lose assets. 

This article will discuss the characteristics and how to avoid crypto honeypot scams. Read this article to find out more!

What is a Crypto Honeypot Scam?

Crypto honeypot scam is a trap created by criminals by creating fake investment projects that appear profitable. 

Typically, these projects are promising high profits, the platform's professional appearance, and attractive features that make it look like a legitimate investment. 

However, once investors have deposited funds, they cannot withdraw their assets. This trap works through hidden code in the smart contract preventing users from withdrawing funds, even though you can make deposits easily. 

The name "honeypot" is taken from the analogy of a honey trap, namely something that looks sweet and profitable actually becomes a dangerous trap.

Read Also: Honeypot Crypto Scam: Definition, How it Works and Types

Scheme of Crypto Honeypot Scam

Crypto honeypot scam takes advantage of the transparency of blockchain technology, especially in projects DeFi. 

The following are crypto honeypot fraud schemes that you should know about.

1. Attracts Attention: Scammers create investment projects that seem promising, such as new token, staking platform, or ICO with the promise of extraordinary profits.

2. Building Trust: The project runs like a real project, attracting investors to buy tokens or deposit funds.

3. Trapping the Victim: Once the funds are in, the code is hidden in the smart contract to prevent users from withdrawing their funds, then Locked funds will be taken by scammers.

In some cases, this scheme can take the form of tokens that cannot be sold, unilaterally locked liquidity, or even a fake platform which is completely controlled by criminals.

Characteristics of Crypto Honeypot Scam

To avoid getting caught in a crypto honeypot scam, here are some characteristics you need to pay attention to before investing.

1. Promises of profits that are too big

If a project is promising returns that are much higher than market standards, then it is a danger alarm. Even though crypto can provide huge profits, no investment always produces consistently high profits.

2. Cannot withdraw funds

The most obvious sign of a crypto honeypot scam is when investors cannot withdraw their funds after depositing them. 

Scammers often give excuses, like technical problems, system delays, or unclear additional terms to buy time.

3. Smart Contracts are Not Transparent

Legitimate projects will have open and inspectable smart contract code. If the project smart contract is too complex, hidden, or unverifiable, then that's a bad sign.

4. No Real Product or Clear Roadmap

Many honeypot projects just rely on hype and promises of profits, without having a real product or development plan. If a project doesn't have a clear roadmap, it's best to avoid it.

5. Anonymous or Unclear Development Team

Many scammers use fake identities or remain anonymous to avoid liability. A legitimate project usually has a transparent team with verifiable experience.

6. Low Liquidity or Manipulated

Healthy crypto projects have sufficient liquidity so that assets can be traded easily. If liquidity is low or can only be accessed by certain parties, it is most likely a trap.

7. No Third Party Audits or Reviews

Secure projects have usually been audited by trusted blockchain security firm. If the project does not have an audit or avoidsFrom questions about smart contract security, you should be alert.

Read Also: Is PulseChain Safe? This is what you need to know!

Example of a Crypto Honeypot Scam

If you already know the characteristics of this scam, here are examples of crypto honeypot scams that you should also know about.

1. False Liquidity Trap

In this case, investors are tricked into depositing funds into a fake liquidity pool on DeFi platforms. 

Once enough funds have entered, the scammers use the smart contract code to prevent investors from withdrawing their funds, then take the assets away.

2. Tokens that cannot be sold

In this case, tokens can only be bought, but not sold. Investors will be tempted to buy, but after they cannot resell the token so they lost all his investments.

How to Avoid Crypto Honeypot Scam

To avoid the trap of crypto honeypot fraud, here are some steps you can follow.

1. Do In-depth Research

Before investing, study the project thoroughly. Pre-check the background of the development team, the project roadmap, and whether there is a real product being offered.

2. Use Blockchain Analysis Tools

Some platforms like Honeypot.is, BSCheck, and Etherscan can help verify smart contracts and detect potential crypto honeypot fraud.

3. Check Security Audit

Legitimate DeFi projects are usually audited by a security firm such as CertiK or PeckShield. If there is no audit or you know the audit results are questionable, it's better to be careful.

4. Join a Crypto Community

Discussions on community forums, such as Reddit, Telegram and Twitter, with asa helps to get opinions from other investors about a particular project.

5. Invest funds gradually

Don't immediately deposit large amounts of funds. Start with small amounts and do withdrawal testing before investing further.

Read Also: What is PulseChain (PLS)? Functions, Tokenomics and Its Founders!

Conclusion 

Cryptocurrency offers great opportunities, but also full of pitfalls and scam traps. By understanding how it works and recognizing its characteristics, you can avoid crypto honeypot scam and protect your assets.

Always remember, if an investment is visible too good to be absurd, it is most likely a scam. 

Keep doing your research, use the tools available, and never make investment decisions based on hype or promise of instant profits.

Read Also: What is SWFTCoin (SWFTC)? Functions and How to Buy $SWFTC Tokens!

Honeypot Scam FAQs

What is Honeypot Fraud?

Honeypot fraud in crypto is a trapping scheme where investors are interested in buying tokens or investing in a seemingly profitable project, but are unable to withdraw their funds.  

How Do Honeypot Scams Work?

Scammers create projects or tokens with the promise of huge profits to attract investors. Once users invest funds, hidden code in the smart contract prevents them from selling or withdrawing the assets so the funds can only be taken by scammers.

How to Recognize a Honeypot Project?

Common signs are promises of too high profits, non-transparent smart contracts, anonymous development teams, and low or locked liquidity. Additionally, if funds are difficult to withdraw, it is a strong indication of fraud.

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Reference

WoolyBlog, 7 Signs You’re Falling for a Crypto Honeypot Scam, accessed March 25, 2025.

Metamask, Understanding and Avoiding Crypto Honeypot Scams, accessed March 25, 2025.

Author: IPR