$32 million stolen since April in sophisticated coin fraud operation: Blockfence
A sophisticated programmatic fraud operation was behind more than 1,300 fraudulent crypto tokens created since April 2023, defrauding more than 42,000 victims of $32 million, according to an analysis by security researchers at Blockfence.
The task runs almost automatically, generating tokens similar to companies or projects that have not yet announced or launched tokens. Fake volumes are then introduced to bait traders. Once enough legitimate capital has come in, the scammer (assuming there are more than one) cashes out the tokens and repeats the process over and over again.
Although the token contract appears to pass a number of security measures, in reality it allows fraud operators the ability to pick up token holders at will, mint infinite tokens for fraudsters (even though the tokens appear to be locked), and counterfeit the maximum supply of tokens. Reserved.
“As we have seen, it could be just one person putting this all together because a lot of the work appears to be done programmatically, like token name generation is a mix of AI and a lot of words. Token distribution… liquidity pool creation, LP token locking, lug pool; “Most of it seems to be automatic,” said Pablo Sabbatella, one of the survey authors.
Sabbatella began investigating the scam after the company launched a token named after it, Blockfence, which was one of hundreds of fraudulent coins created. However, according to Sabbatella, scammers limit their profits to 5-20 eth per token, which appears to help them avoid scrutiny.
“Now we will go a little deeper into this work and look at what we are doing on Binance Smart Chain, Arbitrum, and Base,” Sabbatella said.
How can cryptocurrency traders protect themselves from similar scams? Sabbatella says the first step is not to trade sketch tokens. “You already know you are at very high risk,” Sabbatella said. “I will not buy or invest in an asset I do not understand.”
However, for traders willing to take risks, Sabbatella advises using a variety of fraud detectors. “It’s better to use two or three tools and get results from all of them, rather than just one tool,” he said.
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