Recently, Coinbase unveiled its latest innovation, “Base,” aiming to provide a platform for developers to create decentralized features, enhancing user experience and engagement. However, this promising endeavor faced unforeseen challenges: a swarm of over 500 malicious tokens in a short span.
The Base Scammers’ Modus Operandi
The allure of new platforms like Base offers fertile ground for scammers to thrive on public enthusiasm. Taking advantage of the Base network’s growing popularity, deceitful token creators have perfected the art of capitalizing on “hype, promise, and manipulative tactics”. Solidus Labs, a crypto market integrity firm based in New York, estimates these malicious actors have profited to $2 million.
An alarming study by Solidus sheds light on the alarming extent of this deception. Their data indicates that fake tokens pulled in roughly $3.7 million in trading volume on decentralized exchanges (DEX) linked to Base. Dissecting this figure further:
- Scammers executed buys worth $2.7 million
- Sales amounted to $700,000
- Wash sales contributed an additional $300,000
Typically, these swindlers employ one of two techniques:
- After drawing significant investments, they rapidly drain all liquidity from their DEX pairs, amounting to a shocking $1.7 million.
- Alternatively, they produce an overwhelming volume of new tokens through “minting”, then rapidly offload them, causing the DEX pair’s Ether reserves to plummet, a scam accounting for about $300,000.
A Spotlight on Dubious Coins
Beyond the sheer number of fraudulent tokens, Solidus researchers pinpointed certain “deceptively marketed and traded” cryptocurrencies that infiltrated Base between mid-July and its public launch in August. Base’s initial appeal was moderate. However, the sudden rise of coins like BALD caused a sudden surge in capital and user interest.
This meme-inspired cryptocurrency soared by a staggering 4,000,000% post-launch, pulling in a whopping $68 million from traders. Furthermore, the mastermind behind BALD reportedly amassed over $5.2 million by promoting the token on X. They also inflated its value on a Base-associated DEX named LeetSwap.
During an interview with Bloomberg, a spokesperson from Solidus advised:
“Before diving into any decentralized application, be it on Base or another platform, consumers should exercise the same caution as they would online.”
Base’s open-access nature, though admirable, brings inherent risks. Those make it a lucrative playground for scammers. Analysts from Solidus urge users to be wary, especially of meme coins and DEXs on this layer-2 platform. Losses to fraudulent schemes, incredibly exclusive to these DEXs, leave victims with no recourse for retrieval or withdrawal.
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