Unfortunately, crypto fraud is commonplace, but it is often caused by a relatively small number of groups or individuals who are professional scammers.
For example, on-chain analyst ZachXBT discovered a single Ethereum address to which funds were sent from as many as 114 scams.
These are scams that exploited the release of scam coins, which are cleverly created tokens solely to scam people.
Once created, they were sold despite having no real value. Later, their market value imploded, but by then the scam artist or organization that created them had cashed in the proceeds from the sales.
Scam Coins: The Rise of Crypto Fraud
In his tweet, ZachXBT he specifically mentions two tokens that on the Uniswap DEX crashed in the past few days, namely USDN (Neutrino USD) and GPTLSD.
GPTLSD is reported to have launched on uniswap on March 14, 2023, with a price that exceeded $0.023 on the day of its launch, with a trading volume of more than $1.4 million.
The next day, the price had crashed to $0.004, with volume as high as $75,000, and dropped to zero after just four days.
USDN was supposed to be Neutrino's stablecoin, and in fact until October 2022 it seemed to have maintained its parity with the dollar. Since November, that is, since the collapse of the crypto markets due to the FTX bankruptcynot only has it lost parity, but its market value has even plunged below 3 cents on the dollar.
Among the fraudulent coins linked to that address are also PopeElon, ShibTerminator, ProTrumpToken, Doge1Eth, HyperShib scam, Brics scam, Pound scam and a series of tokens unknown to most, created only to steal funds in the DEX.
Some of the names of these fraudulent coins are really unlikely, such as PeppaPig scam, The Federal Reserve scam, DecentraBitcoin scam, BBC scam, Robocop scam, and the most common ones are those that use the terms Shiba, Shib or Shibarium.
Please note that these are fraudulent coins created only in the last month and a half, so this person or organization appears to be very active. While in 45 days they created 114 scam coins, they are creating new ones at an average rate of two and a half per day.
Also, this is just one address parsed, but scammers are used to using many different addresses.
So the actual overall scale of this type of scam seems to be really huge.
The soul of memecoins
There seems to be a vague connection to the world of memecoinsalthough the latter are born at a much slower rate, and are usually created by different teams.
However, the fact that the scammer predominantly uses names related to meme coins, such as Shiba Inuit can hardly be dismissed as mere coincidence.
Memecoins are often simply tokens created out of thin air, with no project or value, and relying solely on those who decide to buy and hold them for their success.
Its price usually goes down after a while, although, for example, the first meme coin, Dogecoin, over the years has not only not lost value except for 2022, but has even appreciated in value.
It is worth noting that while fraudulent coins are mostly released in DEXi.e. decentralized exchanges where anyone can list their tokens, successful memecoins are mainly those that also manage to land on major centralized exchanges.
Among these stand out Dogecoin and Shiba Inu.
scam coin fraud
ZachXBT did not disclose how the scammers get their scam coins bought at high prices, nor how much they charged.
It's worth noting that he only looked at the activity for the past month and a half from a single address, which is only a very small portion of fraudulent activity of this type, but he still didn't reveal any other details.
Scam coin fraud consists of putting tokens created out of thin air and with no real or speculative value on the market, and convincing as many people as possible to buy them at significant prices.
Then the project is simply allowed to die, and its prices plummet to near zero.
In fact, after the initial launch, buying demand plummets, causing the price to plummet as well.
It's about making sure there's initial buying demand when all the supply is only in the hands of the creators. This way, they cash out as much as they can immediately, leaving the scam coin to lose value in no time due to increased supply and decreased demand.
As impossible as it may seem, or pointless in any case, there are obviously those who buy these tokens and, in effect, only end up giving away their funds to scammers.
