A recent report revealed that crypto scams are up by 45% since 2022. With the sophistication of artificial intelligence and the resulting rise in deep fakes, the crypto community has to remain more vigilant than ever.
Besides doing your own research, there are various tools you can use to help detect scams before you expose your digital assets to a project — and potentially not a legitimate one. In this article, we'll walk you through what crypto scam detection tools are and how to use them, so you're equipped with the knowledge needed to help protect your digital assets.
TL;DR
Crypto scam detection tools protect your digital assets by spotting suspicious transactions and contracts.
These tools spot scams like rug pulls and honeypots, warning you about suspicious token behaviors before it’s too late.
Even expert crypto traders and experienced project participants can benefit from scam detection tools to protect their crypto assets.
By analyzing blockchain activity, these tools help prevent you from giving your assets to bad actors via crypto projects.
Think of the tools as your digital detectives. They spot unusual wallet activity, contract issues, and sudden token transfers to protect your digital assets.
What are crypto scam detection tools?
As crypto continues to grow, so does the prevalence of scams. Meanwhile, scammers are becoming more sophisticated in their methods of tricking you. No matter how long you’ve been involved in cryptocurrency, whether you’re a day trader, a holder, or crypto-curious, no one’s immune to crypto scams.
Crypto scam detection tools are like your own security system for your digital assets. They help you detect scams before you hand over your digital assets to bad actors. These tools analyze blockchain transactions, smart contracts, and token behaviors, helping you spot anything suspicious before it’s too late.
Common scams include rug pulls, where developers of a project drain all the liquidity, and honeypots, which trap you into buying tokens you can’t sell. These tools look for red flags like sudden spikes in transaction volume, unusual wallet activity, or locked liquidity pools.
Tools like Quick Intel can track suspicious token movement on different blockchains, giving you a heads-up on whether a project is shady. TokenSniffer is another useful technology. It looks for suspicious activity like honeypots on tokens. Other tools like Chainalysis and Elliptic are more of a business-oriented way to watch blockchain transactions. Law enforcement and fintech businesses often use these tools to track and stop fraud.
How can you use a blockchain explorer to spot crypto scams?
Blockchain explorers are a common tool for helping spot crypto scams. Although they're relatively simple to use, they do require attention to detail. A blockchain explorer lets you dive deeply into transaction histories, wallet movements, and token behaviors. By knowing what to look for, you can avoid getting caught up in a crypto scam. Here are some red flags to look out for with the help of a blockchain explorer.
Sudden large transfers: If you spot large quantities of a token being moved quickly between wallets, this could be a sign of a rug pull in the making.
Repeated small transactions: While small transactions may seem normal, scam wallets often use repeat small transactions to hide large thefts or launder stolen funds.
Wallet clustering: If you notice a single entity holding multiple wallets, this could be another warning sign to look out for.
Besides blockchain explorers, there are tools that can scan multiple explorers and spot scams to help keep your digital assets safe.
Quick Intel
This tool helps you highlight irregular transactions by scanning through blockchain analytics. It’s useful for spotting unusual token activity, giving you a snapshot of what’s happening onchain. Whether it’s an old project suddenly acting suspiciously or a new token that's raising concerns, Quick Intel can help sniff them out.
ChainAware
ChainAware takes things one step further by tracking wallet behaviors. It helps alert you if anything seems out of the ordinary, like a wallet transferring large amounts after being dormant. The tool can also spot and track suspicious transactions, making it easier for you to identify crypto scams early on.
Applying the tools outlined above to analyze blockchain networks and onchain activities can help sharpen your instincts in spotting suspicious crypto transactions. It's wise to always stay curious, vigilant, and do your own research before participating in a crypto project.
Which tools can help identify rug pulls?
Despite evolving and growing in sophistication, crypto can still be seen as the “wild west.” That's because with some DeFi projects, rug pulls still occur.
For example, OneCoin, which was once labeled the "Bitcoin Killer,” raised over four billion dollars while scamming its followers out of billions. To make matters worse, the project wasn’t even on a blockchain but an SQL server. OneCoin basically never existed, and stands today as one of the largest crypto ponzi schemes.
Another famous rug pull was the Squid Games token, which capitalized on the hype of Netflix’s hit Korean series, Squid Games. The project raised $3.3 million and attracted extensive press coverage, solidifying its apparent legitimacy. However, after hype drove prices higher, the developers drained the project's funds and ran.
Token Sniffer
Token Sniffer acts as a form of watchdog for token contracts. It scans contracts for red flags like locked liquidity, suspicious developer activity, or honeypot traps. Token Sniffer provides a simple score for each token, which helps understand whether the token is safe or risky.
If you come across a “high risk” token, that’s your cue to stay away. Token Sniffer makes it easy to understand and spot token scams, without the jargon or complex terms.
RugDoc
provides detailed analysis and real-time warnings about potential rug pulls by analyzing contract code, liquidity, and developer histories.
Before you put your crypto assets at risk, RugDoc can provide a comprehensive review to support your own research. The platform also offers guides and resources that are easy for beginners to understand but also helpful for crypto experts.
De.Fi scanner
De.Fi scanner analyzes smart contracts on multiple blockchains, including NFTs. The tool then provides a security score that highlights smart contract vulnerabilities and categorizes risks as 'high', 'medium', and 'attention required'.
De.Fi scanner also gives insights into liquidity and ownership, helping you detect rug pulls and proxy issues so you're better equipped to stay safe while exploring DeFi projects.
Which tools can help identify honeypot scams?
Honeypot scams can be difficult to detect and avoid. They pull you in by letting you buy a seemingly promising token. When it comes to cash out, you’re trapped, with no way to sell or withdraw your funds.
Here are the tools you can use to help detect honeypot scams.
Honeypot.is
Honeypot.is takes a deep dive by analyzing the smart contracts behind tokens. When you put in the token’s address, the tool scans through the contract code for any withdrawal restrictions or conditions that prevent you from selling.
It’s an easy-to-use tool to help you avoid being trapped by the honeypot scam.
QuillCheck
Similar to Honeypot.is, QuillCheck looks for any manipulation in contract code that holders may be unaware of. It also highlights if a token has been flagged by the community. By giving a broad analysis of token behavior, you're able to take extra precautions before trading tokens created by bad actors.
Detect Honeypot
Detect Honeypot identifies honeypot tokens by simulating both a buy and a sell transaction. This process checks to see if the token can be sold after purchase, essentially triggering the honeypot trap before you commit all your designated funds. The tool supports multiple blockchains, helping you avoid honeypot scams on decentralized exchanges.
How do blockchain forensics tools help detect crypto scams?
Professional blockchain forensic tools offer a strong defense against crypto scams. They help law enforcement, institutions, and even everyday traders to stay ahead of bad actors.
However, it’s important to proceed with caution when interacting with any person or tool that claims to help recover your crypto funds. This may be a crypto recovery scam.
How do these tools work?
Blockchain forensics tools specialize in tracing suspicious or illicit transactions, and also provide deep insights into blockchain analytics. This helps authorities and traders to achieve the following:
Identify risky addresses: Blockchain forensics allow users to identify which wallets are involved in malicious and fraudulent activities.
Trace stolen funds: The tool can help you follow your stolen crypto assets across blockchains, even when they move through multiple transactions.
Watch for suspicious behavior: Just as you can set up alerts for news stories you want to follow, you can also be automatically notified of suspicious addresses. The feature allows you to monitor threats in real-time and help keep you ahead of a scam.
Below are some of the tools law enforcement and institutional experts use to try to recover stolen crypto assets.
Chainalysis
Many law enforcement agencies lean towards this tool. Chainalysis helps track down illicit crypto transactions and offers detailed analytics to catch criminals who think they can hide behind blockchains. The tool offers features including address labeling to help users quickly identify dangerous addresses, and risk scoring for wallets and transactions to flag possible fraud.
CipherTrace
CipherTrace is known for its fraud detection capabilities. The tool analyzes blockchain networks for vulnerabilities, going deep into an asset's transaction history to spotlight unusual patterns. As a result, CipherTrace can help uncover crypto scams early, before they escalate.
Coinfirm
Confirm works is used by both businesses and authorities to help keep crypto users safe. The technology supports regulatory compliance and helps to identify money laundering risks. With its algorithmic capabilities, Coinfirm can assess different token and wallet addresses, ensuring traders and participants don’t engage with risky crypto assets.
The final word
One downside to crypto’s continued rise is that scams are becoming more common and more sophisticated. As the value of digital assets grows, scammers are targeting holders through a variety of methods. The good news is, there are steps you can take and tools you can adopt — like those outlined above — to help keep you and your assets safe.
As the threat landscape evolves, so too must your knowledge. If you trade crypto or participate in Web3 projects, be sure to remain vigilant and educate yourself on new and evolving threats.
FAQs
Crypto scam detection tools analyze blockchain transactions, smart contracts, and token behaviors to spot suspicious activity, helping to identify and prevent scams.
They look for signs such as sudden liquidity drains, strange token movements, or suspicious developer activity that may indicate a rug pull's in progress. By giving an early warning of a potential rug pull, project participants can act before they lose their funds.
Yes. Scam detection tools are designed for people of all experience levels. They offer warnings and indicators to help any trader or crypto holder, because no matter your experience level, you're at risk of a crypto scam.
The common methods identified by crypto scam detection tools include rug pulls, where developers steal liquidity, and honeypots, which prevent you from selling purchased tokens.
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