Smart Contract Scams: How to Read the Code That Could Rob You

Smart contracts are the backbone of DeFi—automated, trustless agreements powering everything from yield farming to NFT mints. But that automation cuts both ways. Scammers exploit smart contracts to hide traps, draining wallets with code you can’t undo. In 2024, DeFi scams, many tied to rogue contracts, cost users $1.9 billion of the $4.57 billion total crypto losses (Chainalysis, 2025). For consumers, the promise of “code is law” becomes a nightmare when the law screws you.

You don’t need to be a coder to spot these scams—just a skeptic with the right tools. The AnubisDAO rug pull of 2021 is a stark example of smart contract deceit, but it’s not alone. This article explains how these scams work, why they’re rampant, and how to check contracts without a CS degree. BlockGuardian.xyz can help flag suspicious projects, but understanding the basics keeps you ahead of the game.

How Smart Contract Scams Operate

Smart contracts are programs on the blockchain—once deployed, they run as written. Scammers twist this reliability into a weapon. Here’s their playbook:

It’s insidious—code looks legit until it’s too late. Blockchain’s transparency helps, but only if you know where to look.

The AnubisDAO Disaster: Code Gone Wrong

In October 2021, AnubisDAO promised a dog-themed DeFi utopia. Launched with hype on X, it raised $60 million in ETH from eager investors in a single day. Then, poof—the funds vanished. The smart contract had a backdoor: a multisig wallet controlled by the team let them transfer everything to a private address. Investors thought they were funding a pool; instead, they funded a scam.

The contract wasn’t audited, the team was anonymous, and the code—while public—hid its intent in complexity. Blockchain sleuths traced the ETH, but recovery was nil. AnubisDAO wasn’t unique—Squid Game (2021) and countless rug pulls use the same trick: code as a Trojan horse.

Why Smart Contracts Are Scam Magnets

Smart contracts are DeFi’s engine, but they’re also its Achilles’ heel. Anyone can deploy one on Ethereum or Binance Smart Chain for a few bucks—no vetting, no oversight. That freedom births innovation—and fraud. Complexity hides malice; a single line can bury a trap. And once executed, it’s final—crypto’s “no takebacks” rule means victims can’t rewind.

Hype fuels it too. In 2024, unaudited projects promising 1000% APY lured newbies into untested contracts. Scammers exploit trust in “decentralization,” knowing most users won’t—or can’t—read the code. It’s a perfect storm of tech and psychology.

Reading the Code: A Non-Coder’s Guide

You don’t need to code to spot red flags—focus on context and clues. Here’s what to check:

Use Etherscan or BscScan—search the contract address, skim the code tab, and Ctrl+F terms like “withdraw” or “mint.” It’s not foolproof, but it beats blind trust.

Protecting Yourself: Smart Contract Safety

Don’t let code intimidate you—here’s how to stay safe:

It’s about caution, not coding. A little diligence goes a long way.

Final Thoughts: Code Isn’t Always King

AnubisDAO and its ilk show smart contracts can be a scammer’s best friend—and your worst enemy. In 2025, as DeFi grows, so will these traps—hidden in plain sight, waiting for the unwary. “Code is law” sounds cool until it’s stealing your ETH.

You don’t need to be a dev to fight back—just a skeptic with tools like BlockGuardian.xyz. Check audits, limit trust, and keep your funds where code can’t touch them. In DeFi, safety isn’t built in—you build it yourself.