What are frozen tokens on Solana?

Frozen tokens refer to tokens that have been locked or restricted from being transferred or traded. This restriction is enforced through a feature known as "freeze authority."

How Does Freeze Authority Work?

When freeze authority is enabled, the tokens in an account can be frozen and prevented from being traded.

Why Are Tokens Frozen?

Tokens can be frozen for various legitimate reasons, including:

• Security Measures: To protect against fraud, hacks, or unauthorized transactions.
• Regulatory Compliance: To ensure compliance with legal or regulatory requirements.

However, this feature can also be exploited by malicious actors, as discussed below.

How Scammers Exploit Freeze Authority

Unfortunately, scammers can abuse the freeze authority feature to defraud token holders. Here's how they typically operate:

1. Retaining freeze authority: Scammers create a new token and retain freeze authority over it. This is a huge red flag for meme tokens; if you find meme tokens with freeze authority enabled, be very cautious.
2. Promotion and Distribution: They promote the token through airdrops, ICOs, or liquidity pools to attract buyers.
3. Market Manipulation: As the token’s value increases, more users buy in.
4. Freezing Legitimate Holders: The scammers then use the freeze authority to freeze the accounts of legitimate token holders, preventing them from selling or transferring their tokens.
5. Profiting: With legitimate holders stuck, the scammers sell their own tokens at the inflated prices, making a profit.

How to Protect Yourself

To avoid falling victim to such scams, consider the following precautions:

• Research Thoroughly: Investigate the token, the team behind it, and their history. Be cautious of anonymous or unverified teams.

Conclusion