The honeypot scam attracts investors through false liquidity, price fluctuations, and hype, but the contracts are pre-set, making it impossible to exit, and the funds are permanently locked.
New types of honeypots include tampered cold wallets sold through platforms like TikTok, with wallets pre-loaded with private keys, allowing scammers to steal funds immediately.
High sell taxes honeypots, "Honeypot as a Service" toolkits, and other variants make it easier for scammers to target even experienced users.
Test sell before investing, scan the smart contract, avoid sudden hype, and always purchase wallets from official channels to prevent being scammed.
In the rapidly changing world of decentralized finance (DeFi), the speed of scam development is as fast as the technology itself. Among the most deceptive and dangerous are honeypot crypto scams.
Whether you are a newcomer to token trading or a seasoned investor looking for the next meme coin, understanding what a honeypot is can help you avoid becoming the next victim.
A honeypot crypto scam is a smart contract trap. It allows users to buy tokens but quietly prevents you from selling, effectively locking your funds. From the outside, everything seems normal: there is liquidity, price fluctuations, and trading records. But once you buy in, you cannot exit.
You can purchase the token, but when you try to sell, the transaction silently fails or is blocked. Your funds are locked in the contract, and the only wallet that can withdraw or transfer tokens is the scammer's own.
Honeypots are typically built through carefully designed smart contracts, mainly deployed on Ethereum or BNB Smart Chain. Scammers exploit the flexibility of Solidity (the programming language behind Ethereum) to embed malicious logic in the token code. Common tactics include:
Rewriting transfer or sell functions: Only the scammer's wallet address can execute sell operations.
High sell taxes: Charging a 100% fee upon selling, leaving you with nothing.
Hidden blacklists: The contract automatically blacklists all buyers, preventing them from selling again.
Fake liquidity pools: Creating an illusion of liquidity that is actually inaccessible or non-existent.
Honeypots are particularly dangerous because even technically skilled users can fall victim. Tools like Etherscan or BscScan may show that the contract is verified, and the price charts may look very real. However, unless you check the smart contract code line by line or use automated auditing tools, hidden traps are hard to detect.
In short, honeypot scams are not just a bad investment; they are a manipulated game where the "house" always wins.
Honeypot scams in the crypto space are designed using smart contract techniques to trap investors. Their operation typically consists of three steps, and understanding these processes can help you avoid financial loss.
The scam begins with the attacker deploying a malicious smart contract on a blockchain like Ethereum or BNB Smart Chain. The contract masquerades as a normal token, with liquidity, price charts, and even fake community interactions. It may appear on mainstream DEX tools or be promoted in Telegram groups and posts on X platform to gain trust.
Like a carefully laid bait trap, everything looks safe and profitable.
Once investors purchase the token, the hidden restrictions in the contract take effect. These restrictions include disabling the sell or transfer functions for everyone except the scammer's wallet. From the victim's perspective, it seems that the purchase operation has been successful, but when they try to sell, the transaction silently fails.
No warnings. No error messages. The funds are locked away.
To external observers, the token still appears active, with "real" buyers, creating the illusion that the project is developing. But in reality, every buyer is trapped. This stage exploits FOMO (fear of missing out) and the bandwagon effect to attract more victims.
Once enough people have invested, the attacker (whose wallet is the only one allowed to sell) will dump the tokens or withdraw the liquidity pool, cashing out the victims' funds. Since others cannot exit, the token price quickly drops to zero, leaving investors with worthless assets.
The entire scam is written into the contract code from the start. It does not rely on market trends or team behavior—this is a built-in technical trap on the blockchain.
Honeypot scams in cryptocurrency are not one-size-fits-all. Scammers employ different strategies to ensnare investors, all appearing legitimate on the surface, but once involved, it is nearly impossible to exit. Here are the most common types of honeypots:
Smart contract honeypots: These scams allow you to buy tokens but secretly prohibit selling through the contract code. Only the scammer's wallet can exit, while others are left holding worthless tokens. Initially, everything seems normal: price fluctuations, liquidity, active trading, but it is actually a trap designed from the start. Tools like Honeypot.is can help identify this type of scam before you invest.
High sell tax honeypots: In this model, selling is theoretically allowed, but extremely high fees are charged, often up to 100%. When you try to cash out, you either lose most of your funds or get nothing at all. These fees are often hidden in the token's smart contract. If the project team does not clearly explain the fee structure, this is a red flag.
Fake or liquidity-extracting honeypots: Some tokens show real trading activity, but the liquidity pool is either fake or suddenly withdrawn after investors buy in. Without liquidity, you cannot exchange the tokens for valuable assets. This trap uses FOMO and early hype to attract victims. Always check if the liquidity is locked and verifiable.
Hardware wallet honeypots: These scams involve physical cold wallets sold at discounted prices, often through dubious websites or social media platforms. The wallets are pre-loaded with private keys known to the scammer. Once funds are transferred in, they are quickly stolen remotely. Always purchase hardware wallets directly from official manufacturers or certified distributors.
Honeypot as a Service (HaaS): Now, scammers sell pre-made honeypot kits on Telegram and dark web forums. These templates include malicious smart contracts, fake trading bots, and even marketing tools, allowing non-technical criminals to launch scams with a single click. Projects that suddenly go live, use recycled websites, and have homogenized branding are likely part of this type.
While honeypots and rug pulls are both deceptive crypto scams, they operate in fundamentally different ways; understanding these differences can help avoid costly mistakes.
Imagine walking into a store that looks well-stocked, brightly lit, and bustling with customers. You pay for your goods, but when you try to leave, the exit is locked, and the staff has vanished. This is a honeypot scam.
Now imagine another scenario: you enter a store, prepay for goods that the owner promises to deliver "soon." But the next morning, the store, along with its sign, shelves, website, and everything else, has vanished without a trace. This is a rug pull.
Both are crypto scams, but the processes are entirely different.
Trap mechanism: Buyers can purchase the token, but due to hidden restrictions in the contract, they cannot sell.
Timing: The trap exists from the start; the contract is designed to deceive from the moment it goes live.
Visibility: It is often difficult to detect just by reading the code. Scammers use obfuscation or misleading naming to cover up risk signals.
User experience: Victims see price fluctuations, thinking the token is appreciating. But when they try to exit, the sell transaction fails or can only be executed at near-zero amounts.
Trap mechanism: Scammers drain the liquidity pool, preventing holders from trading at real value.
Timing: The attack usually occurs after a period of hype and user investment, very suddenly.
Visibility: It is hard to predict before it happens, but signs like centralized control or unlocked liquidity can serve as warning signals.
User experience: The token price plummets suddenly. Even if it can still be sold, it is too late, and the value has dropped to zero.
The following comparison table highlights the key differences between honeypots and rug pulls:
Not all crypto scams occur on-chain; some start with hardware. A recent case exposed fake cold wallets sold through Douyin (the Chinese version of TikTok) as modern honeypot traps. The wallets looked factory-sealed but contained private keys controlled by the scammers. Once users transferred funds, over $6.9 million was stolen within hours.
These "honeypots" deceive users through low-price promotions and fabricated legitimacy. Behind the scenes, compromised devices and social media ads are used to run professional-grade theft operations.
Always purchase wallets from trusted sources, initialize them yourself, and avoid third-party resellers. Today's crypto threats are not limited to code but also target convenience, trust, and human weaknesses.
Did you know? You can report global blockchain scams through platforms like Chainabuse, and Australian users can use Scamwatch.
Honeypot crypto scams lure investors by masquerading as real opportunities. By following these checks, you can identify risk signals before falling into the trap:
Start with a small test before investing large amounts: Buy a very small amount and immediately try to sell. If the sell fails or is blocked, it is likely a honeypot.
Use smart contract scanning tools: Tools like Honeypot.is, Token Sniffer, or DexTools can detect traps like disabled selling or extreme tax rates.
Verify real selling activity: If the token only has buy transactions and no sell records from ordinary wallets, this is a major warning sign.
Be wary of 100% sell taxes: Some scams prevent exits through extremely high fees. Always check the token's economic model before purchasing.
Don't just look for "verified" contracts: Verified only means the code is visible, not that it is safe. Scammers will verify contracts to gain trust.
Be cautious of sudden hype: When a new coin goes live and is heavily promoted with unrealistic returns, think twice. Rapid hype is a common honeypot tactic.
This article does not contain any investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original text: “Crypto Trading Traps: The Withdrawal Dilemma and Avoidance Guide”
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