Blockfence, a security research firm, has uncovered a sophisticated coin scam operation that has managed to steal a staggering $32 million since April. This programmatic scam operation has created over 1,300 scam crypto tokens, targeting unsuspecting victims and tricking them into investing. The scammers create tokens that closely resemble legitimate companies or projects that have not yet announced or launched a token. They then introduce fake trading volume to entice traders, cashing out the token once enough capital has been drawn in. The process is repeated multiple times to maximize profits.
Despite appearing secure on the surface, the tokens used in this scam allow the scammers to manipulate various aspects. They can burn tokens, mint infinite tokens for themselves, and fake the maximum supply of the token. Interestingly, it is suspected that this entire operation may be organized and executed by just one person, as many of the tasks involved appear to be automated using AI and programming.
Pablo Sabbatella, one of the investigators, began looking into this scam after a token was launched in his company’s name, Blockfence. However, the scammers seem to limit their profits per token, staying under the radar by cashing out between 5-20 eth. Sabbatella plans to delve deeper into this operation and explore its activities on platforms like Binance Smart Chain, Arbitrum, and Base.
To protect themselves from similar scams, Sabbatella advises crypto traders to avoid trading sketchy tokens and not to invest in assets they don’t understand. For those willing to take the risk, he recommends using multiple fraud detection tools to minimize the chances of falling victim to such schemes.