In this section, we will walk you through all known scams, and provide some information about how to spot them, to avoid getting scammed. Unfortunately, there is many different forms of scams and the scammers are getting smarter by the day, meaning that there will be a lot of new form of scams. If you know a scam that isn’t explained here – please contact us so we can ad some information about that scam as well.
A rug pull is unfortunately a frequently practiced form of scam. What happens is that the dev of the token removes the liquidity from pancakeswap and by doing so, steals the investors money and make it impossible to trade with the tokens, making them completely worthless.
To avoid this; make sure that the liquidity is locked. The simplest way is to join the telegram group of the token and ask them for proof that the liquidity is locked.
When a token is launched through a launchpad, there is usually information provided about how big part of the raised BNBs that goes to the liquidity pool – and for how long it is locked.
If the token is launched manually – the liquidity needs to be locked manually as well. There are multiple ways of doing that. One way is to manually lock the LP at a launchpad, Another is to timelock the wallet that holds the LP tokens(the ones you get as a reciepe after providing liquidity, and thus the “reciepe” you use to access the liquidity)
A soft rug pull has the same consequence as an ordinary rug pull, but the way the scam is performed differs. Instead of removing the liquidity from pancakeswap – the devs hold large amount of the tokens in their wallets. The devs then sells all the tokens from their wallets and by doing so, drains all liquidity from pancakeswap, making the tokens worthless and impossible to trade with.
To avoid this: Make sure you understand how many tokens the team have in their control.
To do this, go to the contract address on bscscan.
Then click on “holders”
Then you get the information about all holders and how many tokens they hold, both in terms of quantity and % wise. The document sign in the red circle shows that the holder is a contract(pancakeswap or another exchange). Under the percentage columns, there are some black arrows pointing towards big holders. Some of them can be ordinary “whales” that have bought large quantities of the token, but it could also be that they all are team members.
The team allocation question is a controversial one and there is no sharp definition about what is an appropriate team allocation and what isn’t. One rule of thumb though is that a memecoin should have small team allocation(cause they only need to focus on marketing) while a utility token should have bigger team allocation(cause they are actually building a business and need to hire people and pay for different services etc). As a general rule of thumb I we would say that around 10 % or less is OK for memecoins while much higher can be relevant for utility tokens. However, big team allocation comes with a risk of the team dumping their tokens and by doing so performs a soft rug pull.
This is a question of trust. If you don’t trust the team, don’t invest. If youre unsure, invest a small amount and stick around for a while to figure out if they seam trustworthy or not.
Do also note that wallets can be locked. So if there is a huge amount of team tokens, ask if some of them are locked – and if they say yes – ask for proof.
Also note that its very rare with scammers having a huge amount of token in one and the same wallet for example. They usually split their tokens among 10s or even 100s of wallets.
There is a way to get information about this. Start by clicking on one of the top holder wallet addresses to the left in the picture.
Then click as shown below
Then click as shown below again
Then you see all interactions with BEP20 tokens.
means that a token is bought or received
means that a token is sold or sent
When you scroll down the page, you see all interactions clearly.
In this case, the holder have sold a lot of Copiosa coins. That could potentially be alarming. The thing that matters is how much have been sold. Does it look like the person are skimming(meaning to sell all tokens they have, to do an exit), or is it a reasonable amount of selling that could equate to salary and/or to be able to pay for expenses.
Also, we don’t know yet if the wallet belongs to a team member or an investor. To get that information, begin with clicking the view all button as shown below:
And then search for the first interaction with the token you are investigating, in this case, the copiosa token. I found the first interaction with the copiosa token at page three of the list, and it was a regular buy order from pancakeswap, as shown below:
As you see in the picture, the transaction shows that the sender was pancakeswap, the receiver this wallet, and the amount of tokens 32,002,654.
In many cases, you will see that the biggest token holder is a team token, and then you would see that the tokens were received at the time where the token was created, or that they were received from an address. If so, click that address and do the process I have shown above. Then you see all tokens that’s been send by that wallet. If there is very many transactions that aren’t very significant – it is probable that the team tries to hide the fact that they hold a significant amount of the supply.
A honeypot is a scam that is performed by using a corrupt contract, that only allows the contract creator, and perhaps some other whitelisted addresses, to sell the token. Everybody can buy but only the team can sell. Be extra cautious about this scam when it’s a new listed token with a massive raise in terms of price and market cap. It you know solidity(the programming language used for smart contracts), you can spot the honeypot in the contract code. But as we believe that 99 % of our members don’t know solidity, and since it takes a lot of time to spot it in the contract even if you do, we have a standard advice. If there is a new token that you are interested in buying, start with a small buy – a dollars worth or so. And then try to sell. If you can, all good, buy whatever you want, if you cant sell, puh – you just avoided getting honeypoted.
Airdrop scam is a scam we recently discovered, and we are not fully aware of how it works yet on a technical level. But what happens is that people discover a random token in their wallet. Then they head to pancakeswap to sell it. Before doing so, they need to approve the token. After this is done, it seems like the scammers can access the wallet and steal all the tokens.
If you receive a token without buying it, don’t touch it. If you suspect that you have interacted with it, go to https://app.unrekt.net/ or https://allowance.beefy.finance and connect your wallets and see which tokens that have allowance to spend your tokens. If you see that recently discovered token in that list – push the revoke button to revoke that allowance. Your funds are now safu.
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