GMGN Warns of Critical Honeypot Risk in BSC-Based FLAP Launchpad Tokens

Executive Summary

Cryptocurrency risk assessment firm GMGN has issued a significant warning concerning tokens launched on the Binance Smart Chain (BSC) through the FLAP launchpad. The alert highlights smart contract vulnerabilities that could impose up to a 100% sell tax, effectively preventing investors from liquidating their holdings.

The Event in Detail

GMGN reported receiving user feedback detailing contract risks associated with tokens issued via the FLAP launchpad on the BSC chain. Analysis indicated that these tokens possess dynamic tax mechanisms within their smart contracts, allowing for a sell tax that can reach 100%. This functionality is a known characteristic of "honeypot" scams, where investors can purchase tokens but are subsequently blocked from selling them, leading to the permanent locking of funds. The FLAP launchpad has reportedly removed itself from the default trading pair filter list for users who have not manually configured their filters, suggesting an awareness or response to the ongoing issues. GMGN specifically urged users engaged in Meme coin trading through FLAP to exercise extreme caution due to these potential transaction risks.

Honeypot scams operate by appearing legitimate, with visible liquidity, price movement, and transaction history. However, the underlying smart contract is engineered to allow only specific wallets, typically belonging to the scammer, to execute sale transactions. Other common tactics include overriding transfer functions for most users, embedding excessive sell taxes, or silently blacklisting buyers from reselling.

Market Implications

The immediate consequence of this warning is potential financial losses for users currently holding the affected tokens. The incident is expected to diminish trust in the FLAP launchpad and may lead to increased scrutiny of BSC-based projects that incorporate dynamic tax mechanisms. This situation highlights the inherent risks within the meme coin ecosystem, where projects often emerge rapidly with varying degrees of due diligence and security audits. Long-term impacts could include a call for stricter vetting processes for cryptocurrency launchpads and heightened awareness among investors regarding the necessity of thorough contract analysis before engaging with new tokens. Such events contribute to a negative perception of meme coins launched on platforms perceived to have insufficient security protocols. Earlier in 2025, GMGN co-founder @haze0x also addressed concerns regarding certain DOOD tokens on BSC, indicating the firm's proactive stance in identifying and addressing potential vulnerabilities, including pledges for compensation.

Expert Commentary

Financial security experts emphasize the critical importance of due diligence to mitigate exposure to honeypot scams and other malicious smart contract activities. Key practices include utilizing smart contract scanning tools such as Honeypot.is, Token Sniffer, or DexTools, which can flag disabled sell functions or extreme transaction fees. Investors should also examine transaction histories for evidence of legitimate selling activity from multiple, independent wallets; a lack of such activity is a significant red flag. Furthermore, the presence of a 100% sell tax should be an immediate deterrent. It is crucial to understand that a "verified" smart contract merely means its code is publicly visible, not that it is inherently secure or free from malicious functions. The broader cryptocurrency market has experienced substantial losses due to smart contract vulnerabilities; in the first half of 2025 alone, over $3.1 billion was lost, with smart contract exploits accounting for approximately 8% of these losses, totaling $263 million.

Broader Context

This incident underscores the persistent challenge of malicious smart contract functions and rug pulls within the Web3 space. A common variant, similar to the FLAP launchpad situation, involves smart contracts coded to limit sell orders, effectively creating a "honeypot" where investors can buy but not exit. This mechanism allows scammers to artificially inflate prices, sell their own holdings, and then abandon the project, leaving other investors with worthless assets. The AnubisDAO scam, which resulted in nearly $60 million in losses, serves as a prominent example of such premeditated fraud.

Concerns extend beyond individual scams to the integrity of launchpads themselves. For instance, the Solana Launchpad Rugproof faced scrutiny for risky token launch activities, where a significant portion of a token's supply was controlled by a single entity, creating an illusion of widespread involvement. While FLAP has also advertised features like MEV protection and a stake and burn mechanism designed to foster safer trading and deflationary models, the GMGN warning regarding tokens issued through its platform highlights the complexities and inherent risks that still exist within the rapidly evolving decentralized finance (DeFi) landscape. These events reinforce the necessity for continuous vigilance and robust security measures across the entire cryptocurrency ecosystem.