Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Caution: Binance Chain Red Alarm System Flags 50 New Projects as Potential Scams
Cointelegraph | Arijit Sarkar | Aug 15, 2022
BNB Chain’s Red Alert system flags projects based on obvious features that have been historically used in scams, rug pulls and phishing.
BNB Chain, a blockchain network created by crypto exchange Binance, has identified over 50 on-chain projects that pose a significant risk to users. A mix of crypto spin-offs resembling Dogecoin (DOGE) and Binance and others dedicated to pandas, cyborgs and koalas made the list as untrustworthy and high-risk projects.
See: Binance CEO Raises Red Flag on Massive Chinese Data Leak
BNB Chain’s Red Alarm feature, implemented to protect investors from potential rug pulls and scams, flags projects based on two main criteria: if the contract performs differently from what the project owners advertised and if the contract shows risks that might influence users’ funds.
Speaking to Cointelegraph, Gwendolyn Regina, investment director at BNB Chain, said that the Red Alarm system analyzed 3,300 contracts in July alone, adding that the company continues to develop further measures for highlighting deceptive practices in the ecosystem.
New projects that have not been tested and lack genuine products are flagged by the system based on apparent features that have been historically used in scams, rug pulls and phishing. Regina added:
“We will tend to put them on the ‘Red Alarm’ list to effectively warn users to steer clear or participate with caution.”
As a result, the real-time identification of risky projects serves as a proactive measure in helping to protect investor funds. Red Alarm also allows users to assess project risks by entering the contract address to discover if it has logical flaws or fraud risks.
See: Crypto scams, DeFi hacks, and rug pulls: Why the crypto industry needs insurtech
In addition to BNB Chain’s measures, Regina recommended investors “do their own research” while engaging with projects within the BNB Chain ecosystem.
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