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New Web3 project Dechat has drawn the wrong kind of attention after unintentionally sharing a honeypot scam link during its token announcement on February 26. This mistake was brought to the project’s notice by popular crypto investigator ZachXBT.
Dechat Honeypot Scam Mistakingly Promoted
The crypto sleuth shared screenshots showing the Dechat team’s mistake in sharing the wrong smart contract address, leading users to the wrong Pancakeswap V2 platform.
You clowns literally linked a honeypot for your own token launch. pic.twitter.com/ioUYRryMuR
— ZachXBT (@zachxbt) February 26, 2024
One of the screenshots showed the ‘Sell Tax’ capped at 100%, stopping early investors from selling or dumping tokens at the token generation event (TGE). Typically, the TGE allows investors to liquidate their positions.
Subsequently, the Dechat team admitted their mistake and fixed the issue with a secondary tweet stating that the smart contract address issue had been rectified.
🚀 #DeChat Trading is Now Live! 🚀
We're excited to announce that trading for DeChat is officially open. Get involved with the future of SocialFi today!
🔗 Smart Contract: 0xD69ee2e508363FEd57f89917D5ca03e715ee5519
Trading is live at the following exchanges:
KuCoin:… pic.twitter.com/nnq31qhTGZ— Dechat (@dechat_io) February 26, 2024
The team also announced that its native DECHAT token is available for trading on centralized crypto platforms like Kucoin, Bybit, Gate.io, HTX, and MEXC.
While no specific amount of money was reported lost due to this mistake, one user claimed to have lost an undisclosed amount.
You guys posted wrong contract address and link for pancakeswap!! I lost money because of that!! Will you compensate me for that?
— CryptoInvestor (@Varun4243) February 26, 2024
ZachXBT responded to the user’s comment, stating that the project initially posted the fake smart contract to scam users. However, he hoped the crypto project would compensate for the loss incurred.
I can confirm they post the contract address for a scam initially.
Hopefully they compensate you. https://t.co/9Tp99KU69O
— ZachXBT (@zachxbt) February 26, 2024
Honeypot Crypto Scam Takes About A Minute To Create
Crypto scams have become a staple in the nascent crypto industry, with honeypot scams being just one of many tactics.
Honeypot crypto scams use a smart contract with a loophole for token developers to drain users’ funds behind the scenes. To attract investors, they offer juicy incentives with the promise that users will get sizable returns on their deposited assets.
Once the looted amount is secured, the smart contract creator opens a second trapdoor, and the funds disappear into hacker wallets and crypto mixing services.
According to a blockchain security firm Certik report, honeypot scams are easy to create. The blockchain firm mentioned that creating a honeypot scam takes a minute and exploits social media hype or automation for large-scale operations.
Certik cited an example of a honeypot scam involving the Squid Game token (SQUID), launched in November 2021. The project team moved $6.38 million worth of BNB tokens into the Tornado Cash platform to make them untraceable.