According to an alert issued by blockchain security company PeckShield, Snowflake Floki, an imitation of the Floki Inu meme coin, is a honeypot scam.
#SCAM Peckshield has detected that @snowflakefloki is a #honeypot! Sell is disabled. People are constantly being trapped into buying. Stay *AWAY* from it!https://t.co/6sd6K4hm2x
—PeckShieldAlert (@PeckShieldAlert) December 28, 2021
As the name suggests, a honeypot simulation makes users buy tokens while disabling the ability to sell them. Buyers' money is effectively locked into the contract since all withdrawals are disconnected. Typically, scammers blacklist all other wallets except yours.
This type of scam is not new. Ethereum users have been dealing with honeypots for years. Since Binance Smart Chain is much cheaper to issue tokens, these scams have become a common occurrence on the popular blockchain of smart contract.
Snowflake Floki went live on PancakeSwap, a decentralized platform powered by Binance Smart Chain, on Monday, with some followers instantly noticing the red flag.
There is now an easy way to identify honeypots, although it is not foolproof. A honeypot detector simulates a buy and sell transaction to be able to determine whether or not a particular cryptocurrency project is a scam.
In late October, a token inspired by Squid Game, Netflix's hit survival drama series, made headlines in mainstream media after its price skyrocketed by 40.000% in no time. However, there was a problem: buyers could not sell it due to the built-in “anti-dumping mechanism” that played a key role in raising the price of the token. Not surprisingly, the token turned out to be a scam that deceived buyers millions of dollars.
Many unscrupulous actors are also trying to capitalize on legitimate meme coins like Floki Inu and Shiba Inu.
