Watch out for malicious attempts to scam you out of your tokens
A new token scam involving the VELO token has spread like wildfire among the crypto community. A false airdrop of 150,000 VELO tokens has attracted the attention of a substantial number of crypto enthusiasts. Unfortunately, it turns out this is just the latest trick in scammer’s handbook.
In this article, we’re going to take a detailed look at how the VELO scam works and into ways to protect yourself from such malicious attacks. It is important to note that the example with VELO is just the latest instance such an attack happens. Unfortunately, this can be done with any token, so crypto enthusiasts need to be aware of the scheme and watch out.
How does the VELO token scam work?
The VELO token scam starts out as an innocent airdrop. Users are attracted through advertisements linking to an airdrop signup page.
Here’s an example taken from the Metamask community feeds. Roqe, a Metamask user details what he experienced as a victim of the scam.
Roqe signed up for the airdrop and received 150,000 VELO tokens in his wallet. After seeing the deposit safely in his personal wallet, he went on and tried to swap the VELO token for a more recognized token.
Unfortunately, when he went on to the swap service, he saw that the funds allocated during the airdrop are locked and need to be released through a specifically created website, in this case, https://velochain.io.
After trying to unlock the funds on the specified website, his Metamask wallet activated and sent a message that Roqe needed to approve a transaction. This is the moment the scam launches in full force. Once the user approves the transaction in their wallet interface, the scam decentralized app gains access to this wallet. What’s worse is, the dapp can easily access all compatible tokens, meaning it can withdraw any other funds, not only the alleged airdrop VELO tokens.
In this sense, Roqe’s question, “Can they connect to my wallet and set it to zero?” is extremely valid. By approving access through your wallet’s interface, you essentially give someone else full access to all funds in this account.
Unfortunately, the VELO token scam works in such a way as to entice users to complete the whole process. The main incentive – 150,000 VELO tokens valued at around $5 million. In order for this to work, scammers initially stake VELO tokens in liquidity pools to legitimize the token, and give it a somewhat fair valuation and liquidity boost.
VELO reacts to the scam
The team behind the VELO token and the developers who worked on the original token quickly picked up on what is going on. Here is the official VELO account on Twitter and their warning regarding the ongoing scam:
Do your own research
As the VELO team advises, crypto users should always be diligent and do their research before jumping into the next hot project. As with many other scam cases, VELO is not the only token that can fall victim to such schemes.
If you are looking to spot fake tokens and malicious airdrops lookout for the following red flags:
- Enormous amounts of tokens – no legit project will ever airdrop tokens worth $5 million dollars to a single account
- Suspicious actions required – accepting transactions and approving access to your wallet is never advised when you are not sure about the sender’s intent
- Unfinished websites, or newly registered ones – scammers often overlook the design and feel of their website, which can be an easy giveaway for a malicious project.
Do not despair, you have ways to protect yourself and your wallet from such scam projects. Token approval checkers are hugely beneficial in such instances. You can find the relevant token approval checker for several of the more popular blockchains here:
Token approval checkers allow you to revert approvals that you’ve given to decentralized applications regarding your wallet.
DappRadar will always strive to keep our products safe and secure for users. Considering the surge in scam cases in recent months, our developers have put their best efforts forwards. We’ve ensured that our token swap service and portfolio service do not feature such scam tokens.
If you still haven’t checked out our latest products, you can find the links below: