It has only been a few months since the Squid Game crypto scam took off with millions of user’s funds in one of the most obvious scams cryptocurrency has ever seen.
Since then, these types of scams have been appearing almost daily and have been given the title of Honeypot scams. They all have one thing in common, anyone can purchase the tokens but no one can sell them.
Multiple projects like Bird Token (BIRD) and Meta City (METACITY) have been created in the last couple of days and already created thousands of victims who purchased tokens on decentralized exchanges only to find out there is no way to sell.
These tokens look normal at first glance, but any due diligence will raise multiple red flags. Fake team members on the webpage, no platform, community channels full of bots, and so on.
These warning signs can often be missed by those who look only at the charts and see how quickly a token price is rising. Sadly, once someone purchases the token, it is too late to get their funds back.
While there have been many active investigations toward larger projects who scam users, these types of projects have yet to be caught.
It is a growing problem as many of these new tokens use aggressive marketing tactics to get noticed by many people at once.
Fear of missing out, or FOMO, is one of the main reasons for the large number of victims.
This last year has been a year full of memecoins making people rich and with that comes a propensity for users to avoid doing full due diligence and instead jumping into new projects quickly to avoid missing growth.
For the cryptocurrency industry to grow and be taken seriously, something needs to change with the number of scams.
Too many politicians already believe digital currencies are not safe and these fake projects are helping their case.
Real world utility must take over as the dominant driver in the industry or regulations could hinder the growth of the technology.
Always do extensive research on new projects. Do not quickly trust an excited community as they will quickly remove anyone who tries to point out the obvious flaws. Do not assume negative comments about a project are just FUD.