A smart contract scam is one of the tools used by hackers to gain access to the cryptocurrencies of their victims. They power every decentralized app on a blockchain, from a decentralized finance platform to an NFT project. Hackers may add lines of code to make it easy for them to fleece people of their tokens. It may be in the form of tron smart contract scams, quantstamp scams, or even forsage smart contract scams.
Below are some common smart contract scams in the crypto space.
- Inability to resell tokens
Some scam projects start by hyping their project on different social media, using influencers, and investing a lot in marketing. Everywhere a crypto enthusiast turns, they see the advert of the project. The scammers sell off their coins once people buy into the token en masse. Investors realize that they can’t sell their coins but can only buy more. What happened? The project’s team incorporated lines of code in the smart contract only to allow one wallet address to sell the tokens, meaning that no one else can sell their tokens. Case in point: the Squid Game token scam.
- Buy fee theft
Some tokens have smart contracts that steal cryptocurrencies from people when they buy the tokens. They contain a 99% buy fee which pilfers the victim’s money when they are in the purchase phase.
- Sales fee theft
Some crypto projects have a code that incorporates a 99% sell fee that steals users’ funds when they want to sell the tokens.
- Security vulnerabilities
Genuine crypto startups may have vulnerabilities in their smart contracts, which hackers may exploit. The history of hacks shows that many attacks were linked to exploitation in the smart contract.
- Mint tokens in the wallet
Another type of scam smart contract is where the project allows people to mint new tokens in their wallets and sell them to others.