1,300 fake cryptocurrencies, 42,000 victims and more than R$150 million lost

More than 42,000 victims have been scammed using fake cryptocurrencies on the Ethereum network. The amount reaches 14,000 ETH, equivalent to more than R$150 million at the current price. The research was done by Blockfence, a security company focused on web3.

The report points out that scammers are taking advantage of “refined techniques”. In total, at least 1,300 fake cryptocurrencies have been created, aiming to take advantage of investors’ haste and lack of attention.

“Scammers make money from FOMO (fear of missing out) by creating token names masquerading as cryptocurrency companies and projects that have not yet launched a token.”

Perhaps as irony, scammers created a fake cryptocurrency named after Blockfence itself, who led the research. Memecoins were also another big target for scammers.

Research shows that R$150 million was stolen with 1,300 fake cryptocurrencies

There are currently more than 2 million cryptocurrencies on the market, many of which are traded only on decentralized exchanges. Since these DEXs have no control over the assets traded there, scammers take advantage of creating fake cryptocurrencies with the same name as existing cryptocurrencies or companies.

One of the examples cited by Blockfence was a fake cryptocurrency using the company’s own name. As if the imitation wasn’t enough, the scammers also left several loopholes in the token’s smart contract.

For example, the fake cryptocurrency is presented with an offer of 10 billion units. However, the coup plotters owned 2.2 trillion units.

“The token contract code has been verified, but there is a problem”says Blockfence. “The internal transfer function checks the interaction address and calls the ‘dissort’ function of another unverified contract.”

Fake cryptocurrency called Blockfence appears offering 10 billion tokens, but the actual number exceeds 2 quadrillion.  Source: Blockfence.Fake cryptocurrency called Blockfence appears offering 10 billion tokens, but the actual number exceeds 2 quadrillion.  Source: Blockfence.
Fake cryptocurrency called Blockfence appears offering 10 billion tokens, but the actual number exceeds 2 quadrillion. Source: Blockfence.
How scammers create cryptocurrencies with fake offers.  Source: Blockfence.How scammers create cryptocurrencies with fake offers.  Source: Blockfence.
How scammers create cryptocurrencies with fake offers. Source: Blockfence.

Next, the security company notes that scammers can also burn other investors’ cryptocurrencies, lock cryptocurrencies that were in the liquidity pool, among other peculiarities such as unlimited printing of new coins for contract administrators.

Recommendations to avoid falling for scams

Since this scam targets the names of companies and other well-known cryptocurrencies, the main recommendation is to access the official website and social networks of the project, to check, among other things, the correct addresses of the contracts.

Blockfence advises users to pay attention to certain details in these contracts, such as other hidden contracts, renunciation of the contract owner and automatic creation of cryptocurrencies via the same address.

“This malicious campaign has been running since April 2023 and there is no indication that it will stop anytime soon.”

Therefore, the final recommendation is to pay full attention to trading cryptocurrencies on decentralized exchanges. Although they are very useful, they also come with their own dangers. The full research can be read on the Blockfence website.

Source: Live Coins

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