Cryptocurrency Scam Defrauds Over 42,000 Victims of $32 Million

An investigation by blockchain security firm Blockfence has uncovered an elaborate cryptocurrency scam that defrauded more than 42,000 victims out of over $32 million.

The fraud scheme involved the creation of fake cryptocurrency projects designed specifically to lure in victims and trap their funds in so-called “rug pull” exit scams.

Key tactics uncovered in the Blockfence report:

• Over 1,300 fake token projects were created following the same rug pull blueprint.
• Scammers impersonated real crypto brands like Blockfence to add legitimacy.
• Fake trading volume is simulated to trick victims into buying scam tokens.
• Victims were prevented from selling tokens after purchasing them using malicious smart contracts.

The attackers exhibited deep technical sophistication, according to the investigation. This made it difficult for even the most advanced blockchain analyzers to detect the scam.

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Specific methods used to avoid setting off alarms:

• Renouncing smart contract ownership to appear decentralized.
• Locking liquidity pool tokens to signal no intent for a rug pull.
• Using mixers and bridges to hop between blockchains.
• Maintaining a moderate level of profits per scam to avoid attention.

Cryptocurrency scam deploys over 1,300 rug pulls

After accumulating victims’ money in each fake token pool, the attackers would ultimately drain the liquidity and make off with the funds.

In total, the scammers made over 1,300 rug pulls, netting approximately $32 million in stolen cryptocurrency. The report indicates this scam campaign has stayed active since April 2023 with no signs of halting.

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“It’s important for users to understand that to invest safely, they must not only comprehend the asset they are buying (its value proposition, the team behind it, roadmap, investors, etc.), stated the Blockfence report.

With cryptocurrency adoption growing but fraud threats keeping pace, the Blockfence findings underscore the need for continued vigilance, security education, and protective measures for crypto investors looking to avoid the kinds of traps set by these attackers.