Crypto News – According to a blockchain security firm, since April 2023, a group of cryptocurrency scammers have successfully defrauded over 42,000 people out of over $32 million by using a unique technique that has even tricked some of the industry’s “rug pull detectors.”
Cheating Rug Pull Detectors: Scammers Manipulate FOMO to Defraud 42K Users
Similar to several cryptocurrency rug-pull scams, the con artists generate tokens that look like they belong to a cryptocurrency project that is about to start, appealing to investors’ FOMO. But in a report published on January 18, Pablo Sabbatella, head of security research at Blockfence, disclosed that the con artists employed a unique technique that included tricking victims and fooling rug-pull detectors by pretending to mint and burn the maximum amount of tokens.
What Method Do Scammers Follow?
Sabbatella claims that the con artists start the scheme by transferring 10–20 ether to an account that is held by someone else, and they then use that money to make fictitious tokens. Fake liquidity is poured into the scam project, similar to many other rug-pull scams, giving the impression that liquidity pools (LPs) on Ethereum-based decentralized exchanges, like Uniswap, are legitimately large.
But then, according to Sabbatella, the scammer would apply a lock() method to the LP tokens to give the impression that investors wouldn’t be duped. The scammer uses the setUserBalance method after fraudulently inflating the price of the bogus token through wash trading. Since the scammer technically torched the token, this sets the victim’s token balance to “1” and prevents it from being sold.
Finally, the scammer removes the liquidity from the LP, dumping the token value to nearly zero,Sabbatella