Cryptocurrency fraud is a common issue, often caused by skilled con artists creating scam coins. These tokens have no intrinsic value and are designed to defraud people. Learn more about this problem and how to avoid it.
Unfortunately, cryptocurrency fraud is widespread, although it is frequently the fault of a relatively small set of organizations or individuals that are skilled con artists.
For instance, on-chain analyzer ZachXBT found a single Ethereum address that received money from up to 114 scams.
These frauds took advantage of the introduction of scam coins, which are tokens skillfully made with the intention of defrauding people.
Despite having no intrinsic value, they were sold after being manufactured. Later, their market value plummeted, but by that time, the con artist or the company that produced them had already collected the sales money.
Scam coins: the rise of crypto fraud
ZachXBT specifically mentions Uniswap DEX tokens USDN (Neutrino USD) and GPTLSD in his tweet.
According to sources, GPTLSD was launched on Uniswap on March 14, 2023, with a trading volume of over $1.4 million and a price above $0.023.
The next day, volume dropped to $75,000, and the price plunged to $0.004 after four days.
Neutrino’s stablecoin, USDN, pegged to the dollar until October 2022. Since November, after the FTX bankruptcy crashed crypto markets, it has lost the peg and sunk below 3 cents on the dollar.
PopeElon, ShibTerminator, ProTrumpToken, Doge1Eth, HyperShib scam, Brics scam, Pound scam, and more anonymous tokens designed to steal DEX user money are related with that address.
Some of the names of these counterfeit coins are extremely improbable, including PeppaPig, The Federal Reserve, DecentraBitcoin, BBC, and Robocop. However, the names that use Shiba, Shib, or Shibarium are the most prevalent.
The fact that they are scam coins that have only been produced in the past month and a half indicates that this person or group is quite active. They produced 114 scam coins in 45 days, but they are currently producing an average of 2.5 every day.
Additionally, although only one address was examined, con artists frequently use a variety of addresses.
Therefore, it appears that this type of scam has a really large overall scope.
Although memecoins are created by various teams and have a much lower birth rate, there appears to be some connection to that world.
But it’s hard to dismiss the scammer’s frequent use of names associated with meme coins, like Shiba Inu, as a mere coincidence.
Memecoins are frequently just tokens that have been generated out of thin air, with no project or value, and whose success depends only on the people who choose to purchase and keep them.
Although the first meme coin, Dogecoin, has over the years not only not lost any value except for 2022, but has actually increased in value, this is not uncommon for meme coins.
It is important to note that successful memecoins are typically those who manage to land on major centralized exchanges as well. Scam coins are typically launched on DEXs, or decentralized exchanges where anybody may list their tokens.
The two most notable of these are Shiba Inu and Dogecoin.
The coin fraud scam
ZachXBT withheld information regarding the scammers’ cash-out amounts as well as how they are able to sell their fake coins at such high prices.
It is important to note that he only examined the behavior of one address during the previous month and a half, which represents a relatively small fraction of the fraudulent actions of this kind. Despite this, he withheld all additional information.
The scam coin fraud entails convincing as many individuals as possible to purchase tokens that were generated out of thin air and had no real or speculative worth for substantial prices.
Their prices then fall to almost zero as the project is simply allowed to fail.
In actuality, after the initial debut, the buying demand declines, which also causes the price to decline.
All the supply being held by creators requires initial purchase demand. Creators aim to make as much money as possible with one sale. The quick sale causes a depreciation in the fake coin’s value. The depreciation is due to an increase in supply and a decrease in demand.
Despite how absurd or impossible it may seem, it appears that some people buy these tokens, effectively giving their money to con artists in the process.