Automated Scam Scheme Defrauds $32 Million, Experts Reveal

Since April 2023, unidentified individuals have created over 1,300 fraudulent tokens, executing a rug pull that has stolen more than $32 million from approximately 42,000 users, according to analysts at Blockfence.

? MASSIVE $32M RUG PULLS OPERATION UNVEILED ?
We are sharing an investigation conducted by our team, which resulted in:
— More than 1.300 different token rug pulls
— More than $32M stolen
— More than 42.000 victims
— Novel techniques used to avoid being detected
A thread ? … pic.twitter.com/Qnr3RHIbCd

— Blockfence (@blockfence_io) January 12, 2024

According to experts, the coin creation operation is almost entirely automated. The algorithm selects and creates a token resembling an asset of an existing company or project.

Subsequently, the fraudsters inflate the token’s volume, and upon reaching sufficient liquidity, they withdraw all funds.

“All of this can be organized by one person because many tasks are performed programmatically, such as token name creation, which involves a multitude of words generated by AI. Deploying the coin, creating liquidity pools, locking tokens, rug pull. Most of them appear automated,” stated analyst Pablo Sabbatella.

Blockfence initiated an investigation after discovering a scam coin of their own company. The perpetrators limit the “profit” from each asset to 5-20 ETH to remain undetected.

To safeguard funds, Sabbatella advised the crypto community “not to buy tokens you do not understand.” Risk-taking traders can use various scam detectors.

The Blockfence team will now examine the perpetrator’s activity in the BNB Chain, Arbitrum, and Base networks.

According to Immunefi, in 2023, the bitcoin market lost $1.8 billion due to hacks and fraud, with 319 incidents reported.

In December, prior to the launch of Sleepless AI farming on Binance’s Launchpool platform, unknown individuals conducted a rug pull of the token bearing the same name.