What is the honeypot scam?

The crypto ecosystem may be innovative, but it is plagued with different types of hacks and attacks. A common type of crypto attack is the honeypot scam. 

Usually, the charade starts with the crypto team investing a lot in marketing and creating a buzz around their platform. They may employ celebrities to talk about the project, spend their top dollar on social media adverts and even use Youtube crypto influencers to create hype around the project and what they claim to offer. Some celebrities have even been sued for promoting scam projects.  

Everywhere people turn, they see lofty price projections of cryptocurrencies; due to the hype surrounding the project, the demand for the coin increases. Then, the token value starts mooning, making an incredible all-time high. 

Investors get excited, thinking they have made great profits, and when they decide to cash it in by converting the token to fiat or other cryptocurrencies, they are surprised. 

The thing is, you cannot sell them; as a result, they keep getting an error message that stops them from trading the token. 

To aid in this scam, the coin developers wrote lines of code to disallow coin selling, making them the only ones allowed to sell the tokens. 

A good example of this is the Squid Game token. It used the attention that the popular TV series was getting to scam people out of their money. Some investors felt that the token was related to the movie and bought them. Unfortunately, the investors only realized it was a honeypot scam when they could not sell their tokens. And the developers ran off with millions of dollars worth of BNB, leaving their buyers holding valueless tokens.