BNB Chain, a blockchain network created by cryptocurrency exchange Binance, has identified more than 50 on-chain projects that pose significant risk to users. A mixture of spin-offs similar to Dogecoin (DOGE) and Binance and others dedicated to pandas, cyborgs, and koalas are listed as high-risk and dodgy projects.
BNB Chain’s Red Flag feature, which was put in place to protect investors from potential rug pulls and scams, flagged projects based on two main criteria: if the contract behaves differently from what the project owners announced or if the contract shows risks that could influence users’ funds.
Speaking to Cointelegraph, Gwendolyn Regina, chief investment officer of BNB Chain, said that the Red Alert system analyzed 3,300 contracts in July alone, adding that the company continues to develop further measures to expose deceptive practices in the ecosystem.
New projects that are untested and lack real products are flagged by the system based on obvious characteristics that have historically been used in scams, rug pulls, and phishing. Regina added:
“We will tend to put them on the ‘Red Alert’ list to effectively warn users to stay away or engage with caution.”
In this way, real-time identification of projects at risk serves as a proactive measure to help protect investor funds. The feature also allows users to assess project risks by entering the contract address to discover if it has logical flaws or fraud risks.
In addition to the BNB Chain measures, Regina advised investors to “do your own research” by participating in projects within the BNB Chain ecosystem.
Just like investors, well-intentioned projects are equally vulnerable to attacks and scams. Velodrome Finance, a trading and liquidity marketplace, recovered $350,000 of lost funds after tracing the attack to one of its own team members. Following an internal investigation, Velodrome revealed:
“To our disappointment, we learned that the attacker was a Gabagool teammate.”
Although many members of the community supported the prominent programmer, Gabagool admitted to the accusations made against him. Velodrome later revealed that he was working with legal counsel to determine next steps.
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