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Binance flags certain crypto projects as high-risk to protect investors from scams

India Today logo India Today 16-08-2022 Sourish Samanta

Pandas, koalas, and cyborgs, a mix of crypto spin-offs are amongst 50 other on-chain projects flagged by Binance's blockchain network as high-risk and untrustworthy. The BNB chain, powered by crypto exchange Binance, implemented its native Red Alarm feature to protect investors from potential scams, rug pulls, and more.

The Red Alarm feature can flag projects whose contract performs differently than what's been advertised. It also flags contracts that show risks that could affect users' funds.

The Red Alarm system analysed over 3,300 contracts in July alone as part of its regulatory practice. Gwendolyn Regina, investment director at BNB Chain, while speaking to Cointelegraph, said that the company is also adding further measures to flag deceptive practices in their ecosystem.

The alarm system flags projects based on historically used tactics in scams, phishing, and rug pull. Then suspicious projects are added to the Red Alarm list to warn users.

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"Red Alarm" list with potentially harmful projects found on the BNB chain.

New projects which haven't been tested enough are also flagged by the system. Real-time identification of potentially harmful projects also reduces the risk of investors losing their funds.

The user can also do their own research on the BNB ecosystem and use the feature to assess project risk. The feature also allows users to assess project risk and see if it has any history of fraud or other related risks.

With the increase in fraud and fin-crimes, a risk assessment feature like this would reduce risks, optimise investment opportunities and help the users make informed choices.

A 2022 Chainalysis report estimated that at least $10 billion worth of crypto is held in illicit addresses.

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