Leading U.S. crypto exchange Coinbase has announced its ERC-20 Scam Token Detection System based on artificial intelligence. The team claims that this system can spot "both known and unknown scam types." The chief legal officer of Coinbase has spread the word about it in today's X post: "Here's how our Eng team is using AI to detect ERC-20 scam tokens. It's only the beginning."
In a recent blog post that announced the launch of the new scam-detection system, the Coinbase team stressed that scam artists are becoming more sophisticated and stronger. They now use fake tokens for scamming crypto users. Coinbase's new tool helps to spot and filter out such tokens in order to protect its army of users.
The article mentions two major types of crypto scam: honeypots and internal fees. The former is a "deceptive trap" prepared to lure and trap crypto investors. These are fraudulent tokens that contain hidden features that prevent investors from selling or transferring them after purchase.
Internal fees scams contain sudden huge fees while making transactions with these tokens. Both types of scams utilize a special sort of token created specially for that purpose. Numerous new types of scams emerge everyday and attack the crypto space.
Yuri MolchanHere's Coinbase's response to scams
The solution created by Coinbase for detecting scam tokens based on Ethereum's ERC20 standard utilize two strong strategies to recognize crypto scams.
The first is called Smart Contract Auditing, and it examines the integrity of ERC20 coins using smart contract audits. Through this, Coinbase constantly expands its scam data base.
The second one is referred to as Machine Learning Production. This machine learning tool seeks unknown types of scams with abnormal activity patterns.
Both of these strategies together help Coinbase to create a secure list on Ethereum-based tokens, helping them to protect users in the cryptocurrency space.
Alex Dovbnya
Dan Burgin
Vladislav Sopov