Crypto Scam Alert- Unmasking Memecoin Scams: Protect Your Crypto
Crypto Scam Alert– Scammers are increasingly using tactics to deceive unsuspecting crypto traders, particularly on platforms like GMGN, a memecoin analytics site. Recent findings from security researcher Roffett.eth highlight how malicious developers are manipulating trending lists to facilitate theft.
How the Scam Works
According to Roffett, scammers create tokens that allow developers to transfer users’ funds directly to themselves. The process involves passing the token between various accounts to inflate its trading volume artificially. This inflated volume can land the token on GMGN’s trending list, attracting unwitting investors who believe they are purchasing a popular asset.
Once victims buy the token, it takes mere minutes for their investments to be drained from their wallets. The developers then reinvest the stolen tokens into liquidity pools and resell them to new victims. Roffett identified three tokens—Robotaxi, DFC, and Billy’s Dog (NICK)—as examples of these malicious assets.
Identifying the Malicious Code
Roffett’s investigation began when friends reported losing coins after purchasing them from the trending list. Initially believing their wallets had been hacked, further inquiry revealed a different story. Roffett discovered that attackers were using standard phishing techniques, specifically exploiting a permit function that allowed them to execute token transfers without the user’s consent.
In one instance, Roffett analyzed the contract code of NICK and found it included some very odd and obfuscated methods. He noted that these methods did not resemble typical token contracts, leading to suspicions about their true function.
As Roffett stated:
“If the caller’s address equals the recoverer, then by constructing a specific signature manually, one can obtain the permit permission of any token holder and then transfer the tokens.”
The Ongoing Threat of Honeypots
Scam tokens, often referred to as honeypots, continue to pose significant risks in the cryptocurrency market. In a recent example, a scam developer drained $1.62 million from victims by selling a token named BONKKILLER that prevented users from selling it. A report from blockchain risk management firm Solidus in 2022 warned of over 350 scam coins created within that year.
As crypto enthusiasts navigate the evolving landscape, it remains crucial to exercise caution and conduct thorough research before investing in any tokens. Awareness of these scams can help protect users from becoming the next victims in the ever-changing world of cryptocurrency.
FAQs
What are memecoin scams?
Memecoin scams involve fraudulent tokens that are designed to deceive investors. Scammers create these tokens and artificially inflate their trading volume, often listing them on analytics sites like GMGN. Unsuspecting users purchase these tokens, believing they are popular, only to have their funds stolen shortly after.
How can I identify a scam memecoin?
To identify a potential scam memecoin, look for red flags such as unusual contract code, lack of transparency, and artificially inflated trading volumes. Additionally, conduct thorough research on the token’s development team and community. Avoid tokens that appear on trending lists without credible backing.
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