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Honeypot Crypto Scams – How to Avoid Them

Honeypot surrounded by bees with crypto inside

Key Takeaways

  • Honeypot crypto scams are fraudulent schemes that lure victims and trap their funds using malicious smart contracts, making withdrawal impossible.
  • Famous examples like the Squid Game token scam and CryptoEats highlight the scale of these deceptive operations, emphasizing the need for due diligence before investing.
  • Detecting honeypot scams involves using tracker tools, monitoring suspicious token behavior, and recognizing exaggerated claims.
  • Users can protect themselves by learning to read smart contracts, revoking unnecessary permissions, and avoiding investments driven by FOMO.

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.

What Is a Honeypot Crypto Scam?

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:

  1. Attack Vector: Scammers deploy malicious smart contracts that may look legitimate but are coded to restrict users from selling the token.
  2. Promotion: The bad actors promote their tokens via social media, forums, or direct messages. In many cases, they leverage fake celebrity endorsements or exaggerated promises.
  3. Objective: The goal is to amass as much cryptocurrency as possible before disappearing with the funds.

Once a victim interacts with the malicious smart contract, it might be too late to recover their funds.

How Does a Honeypot Crypto Scam Work?

Honeypot scams rely on several interconnected elements, making them sophisticated and difficult to detect, especially for newcomers. 

Malicious Smart Contract

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.

The Promise of Rewards

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.

Funds Trapped in the Protocol

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.

Devs Steal Your Funds

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.

Famous Honeypot Crypto Scams

While honeypot scams occur frequently, some have stood out due to their massive scale or creativity. Here are a few notable examples:

Squid Game Token (SQUID)

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.

CryptoEats

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.

Titan AI

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.

How To Detect a Honeypot Scam

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:

  • Analyze Smart Contracts: Use platforms like Etherscan, Solscan, and others to review the contract’s code. Look for any suspicious conditions such as restrictions on token sales.
  • Tracker Tools: Websites like Honeypot.is, Solsniffer, and Detecthoneypot can scan smart contracts and detect malicious attributes.
  • Monitor Token Behavior: Tokens that allow purchases but restrict sales are a major red flag.
  • Exaggerated Claims: Be wary of projects promising guaranteed returns or relying on celebrity endorsements.

Taking these steps can help you identify potential scams before committing your funds.

What To Do if You’re Trapped in a Crypto Honeypot

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:

  • Stop Interacting with the Contract: Avoid further transactions with the malicious protocol, as scammers may exploit additional permissions.
  • Revoke Smart Contract Approvals: Use tools like Revoke.cash to remove any permissions you granted to the scammer’s contract.
  • Report the Scam: Share your experience on social media, forums, or with blockchain platforms to warn others.
  • Reflect and Learn: Finally, use the incident as a lesson to improve your security practices for the future.

How To Avoid Crypto Honeypots: A Checklist

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:

  • Be Skeptical of Offers: Ignore unsolicited messages offering investment opportunities, especially on platforms like Telegram or Discord.
  • Learn to Read Smart Contracts: Familiarize yourself with basic coding principles to identify red flags in smart contracts.
  • DYOR (Do Your Own Research): Review project details such as the whitepaper, team credentials, and tokenomics, using reliable tools like blockchain explorers.
  • Revoke Old Permissions: Audit and revoke unnecessary smart contract approvals using Revoke.cash.
  • Avoid FOMO: Resist the pressure to buy without verifying the legitimacy of a project.

Closing Thoughts

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.

FAQ

1. What are signs of a honeypot scam?

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.

2. Are honeypot scams illegal?

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.

3. Can I recover funds lost to a honeypot crypto scam?

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.

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