The blockchain world of Web3 offers a universe of opportunities to maximize the value of your digital assets. It opens the doors to decentralized finance, blockchain gaming, and unique investment strategies. However, this decentralized space also attracts bad actors looking to exploit unsuspecting users. According to CertiK’s Hack3d Web3 security report, users lost over $2.3 billion in security incidents in 2024. Among the myriad of risks and scams you may encounter, one of the most deceptive traps is the honeypot crypto scam.
Understanding how honeypot crypto scams operate and recognizing their warning signs is crucial for safeguarding your digital assets. In this article, we’ll examine these scams in detail, highlight some famous examples, and provide a few tips to protect yourself from falling victim to these schemes.
A honeypot crypto scam is a fraudulent scheme that traps user funds and prevents them from selling. Furthermore, this scam usually lures victims with promises of high returns or exclusive opportunities, only to lock their assets in a malicious protocol.
Honeypot scams often operate through fake tokens or smart contracts, giving the appearance of legitimacy. Unlike pump-and-dump schemes, which rely on artificially inflating a token’s price, honeypot scams focus on creating a barrier that prevents victims from even having the option to withdraw their funds.
Some of the key characteristics of a honeypot scam include:
Once a victim interacts with the malicious smart contract, it might be too late to recover their funds.
Honeypot scams rely on several interconnected elements, making them sophisticated and difficult to detect, especially for newcomers.
At the core of every honeypot scam is a smart contract designed to restrict user actions. These contracts appear functional but are programmed with hidden conditions. For example, it will allow purchases as usual but block sales unless executed by the scammer’s wallet address. In every other aspect, the smart contract can function normally.
To attract victims, honeypot scams often promise extraordinary rewards or returns. This could include guaranteed profits, exclusive access to limited tokens, or inflated annual percentage yields on staking protocols. In addition, scammers exploit FOMO (fear of missing out) to pressure users into acting quickly.
Once users invest in the token or platform, they find that their funds are locked. The malicious contract ensures that transactions, such as withdrawing funds or selling tokens, are impossible for anyone other than the scammer.
The scammers behind the smart contract retain exclusive control, allowing them to siphon off all trapped funds. Lastly, when they have collected enough money, the scammers drain all liquidity, erase their digital traces, and abandon the project.
While honeypot scams occur frequently, some have stood out due to their massive scale or creativity. Here are a few notable examples:
Launched in 2021, the Squid Game token capitalized on the popularity of the Netflix series of the same name. At the same time, the developers promised innovative gamified elements tied to the show, attracting significant attention. However, it was all a honeypot scam. The token’s smart contract prevented users from selling and the market cap of the token kept going up as more and more users invested.
Finally, the scammers made off with over $3.3 million, leaving investors with worthless tokens.
This scam claimed to be a blockchain-powered food delivery service. With good-looking marketing and fake endorsements, CryptoEats raised half a million in 2021 before disappearing. The project turned out to be a honeypot scam, demonstrating the importance of verifying a project’s authenticity before investing.
A more recent example of a honeypot scam was Titan AI. Marketed as a new incentive AI for global idle resources at the very start of 2025, it was actually a honeypot. It’s unclear how much users lost and all traces of the project have already been erased.
Spotting a honeypot scam can be a challenge, especially if you don’t know where to look. Here are a few red flags and tools that can help you:
Taking these steps can help you identify potential scams before committing your funds.
Falling victim to a honeypot scam is a difficult experience, and recovering your funds is often impossible. However, there are a couple of steps that can help you reduce any further harm:
Avoiding honeypot scams requires proactive measures and constant vigilance. To avoid falling victim to a crypto honeypot and protect your digital assets, you can follow this checklist:
Cryptocurrency offers exciting opportunities but the decentralized and anonymous nature of Web3 also brings significant risks. Honeypot scams exploit human psychology and the lack of technical knowledge to steal funds. As a result, awareness and education are your best defense.
Always remember to verify projects and use available tools to analyze smart contracts. Finally, never invest more than you can afford to lose.
Common indicators include promises of guaranteed high returns, fake endorsements, a sense of urgency, tokens restricting sales, and projects lacking clear whitepapers or team transparency.
Yes, honeypot scams are illegal as they constitute fraud. However, the decentralized and anonymous nature of blockchain makes it difficult to trace and prosecute the perpetrators.
Recovering funds from a honeypot scam is extremely challenging due to the irreversible nature of blockchain transactions. Your best action is to report the scam and take steps to improve your security practices.