The new Web3 project, Dechat, garnered unfavorable attention when it inadvertently included a honeypot scam link in its token announcement on February 26. This error was highlighted to the project by well-known crypto investigator ZachXBT.
Crypto Sleuth Exposes Dechat’s Smart Contract Mishap
Renowned crypto investigator ZachXBT has unveiled startling screenshots revealing a critical error made by the Dechat team during their token announcement. The mishap involved the inadvertent sharing of an incorrect smart contract address, directing users to the wrong Pancakeswap V2 platform.
Incorrect Smart Contract Address
ZachXBT’s screenshots depict the Dechat team’s oversight in providing the wrong smart contract address, leading unsuspecting users to the incorrect Pancakeswap V2 platform. This misdirection could potentially result in users falling victim to scams or losing funds due to the erroneous information provided.
‘Sell Tax’ Set at 100%
One of the screenshots shared by ZachXBT sheds light on another concerning aspect of the Dechat token announcement. It reveals that the ‘Sell Tax’ was capped at 100%, effectively preventing early investors from selling or dumping tokens during the token generation event (TGE). This departure from the norm of allowing investors to liquidate their positions at the TGE raises red flags about the project’s transparency and investor protection measures.
🚀 #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 further revealed that its native DECHAT token is now tradable on centralized cryptocurrency platforms such as Kucoin, Bybit, Gate.io, HTX, and MEXC.
Although no precise monetary figure was disclosed regarding losses resulting from this error, a single user asserted experiencing an undisclosed loss.
You guys posted wrong contract address and link for pancakeswap!! I lost money because of that!! Will you compensate me for that?
— CryptoInvestor.NYAN🔫😼 (@Varun4243) February 26, 2024
In response to the user’s comment, ZachXBT remarked that the project initially shared the fraudulent smart contract to deceive users. Nonetheless, he expressed hope that the crypto project would provide compensation for the incurred loss.
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
Unveiling Honeypot Scams: Deceptive Tactics in the Crypto Space
Honeypot scams have cemented their place as a common occurrence in the burgeoning crypto industry, representing just one among various deceitful tactics employed.
How Honeypot Scams Work
Honeypot crypto scams operate by utilizing a smart contract imbued with a loophole, allowing token developers to siphon users’ funds clandestinely. These scams entice investors with enticing incentives, promising substantial returns on their deposited assets.
Once a significant sum is amassed, the smart contract creator activates a second trapdoor, diverting the funds into hacker wallets and crypto mixing services, effectively vanishing without a trace.
Accessibility and Ease of Creation
According to a report by blockchain security firm Certik, honeypot scams are relatively simple to craft. The firm noted that the creation of a honeypot scam can be accomplished swiftly, leveraging social media hype or automation for large-scale deployment.
As an illustration, Certik highlighted a case involving the Squid Game token (SQUID), which emerged in November 2021. The project team transferred $6.38 million worth of BNB tokens to the Tornado Cash platform, rendering them untraceable, exemplifying the deceptive nature of honeypot scams.
