A honeypot is a scam used in the crypto industry to trap victims and steal their assets or sensitive information.
What Is a Honeypot?
Types of Honeypots
Fraudsters often create elaborate fake websites for crypto exchanges, wallets or investment platforms that closely resemble real, popular services. They use similar names, logos, web design and layouts to make the sites look credible. The sites encourage users to create accounts, link bank details and deposit funds, which the scammers can steal.
Scammers send fake emails that appear to come from well-known crypto companies or services, such as exchanges. The emails include logos and content to make them seem official. They may claim there is an issue with the recipient’s account and request login details to resolve it. Other times, they instruct the user to deposit funds into a fake wallet address controlled by the scammer. If the recipient enters their info or makes a transfer, the scammer gains access.
Social Media Scams
Scammers entice users by offering free cryptocurrency through airdrops. They instruct the recipient to provide their wallet address or private key to receive the funds. However, this gives the scammer access to the wallet, allowing them to steal any cryptocurrency within it. Legitimate airdrops never require sensitive wallet details.
How Honeypots Work
Honeypots are carefully orchestrated scams that operate in several key stages:
The first step is for the attacker to decide what type of honeypot to create. They choose based on their goals and available resources. For example, a phishing site that mimics a popular exchange or an investment Ponzi scheme may be set up.
Next, the fraudster builds the honeypot, like crafting a fake website. They design it to precisely imitate the real service it is impersonating. This includes visually identical interfaces, branding, functionality and wording to avoid suspicion.
With the honeypot fully created, the scammer then drives traffic to it through various promotion techniques. They may use search engine optimization, paid ads, social media campaigns and engagement through fake accounts. The goal is to widely disseminate links and information about the fraudulent platform.
4. Monitoring Activity
Once the site is live and gaining traction, the honeypot operator closely monitors any user activity within it. They await any account sign-ups, deposits, data entry or other engagement.
This is the final stage after a victim interacts with the honeypot. As soon as assets are deposited or sensitive data is collected, the scammer swiftly moves to steal it. Afterward, they rapidly take down the fake platform to avoid being caught.
How to Avoid Honeypots
Here are some best practices to identify and steer clear of honeypots:
Moreover, sometimes, original accounts get hacked briefly to trap followers.