Recently, Coinbase launched its latest innovation, “Base,” which aims to provide developers with a platform to create decentralized functions, thereby enhancing user experience and engagement. However, this promising effort faced an unforeseen challenge: more than 500 malicious tokens emerged in a short period of time.
Base scammers' modus operandi
The appeal of new platforms like Base has provided fertile ground for scammers to exploit public enthusiasm and flourish. Taking advantage of the growing popularity of the Base network, deceptive token creators have perfected the art of using "hype, promises, and manipulation strategies." Solidus Labs, a New York-based cryptocurrency market integrity firm, estimates that these malicious actors have made $2 million in profits.
A shocking study by Solidus revealed the staggering extent of this deception. Their data showed that fake tokens attracted approximately $3.7 million in trading volume on decentralized exchanges (DEX) associated with Base. Dissecting this graph further:
Scammers executed $2.7 million worth of purchases
Sales reached $700,000
Cleaning sales contributed an additional $300,000
Typically, these scammers will employ one of two techniques:
1. After receiving a large amount of investment, they quickly drained all liquidity in the DEX trading pair, amounting to a shocking $1.7 million.
2. Alternatively, they produced a large number of new tokens through "minting" and then quickly sold them, causing the DEX pair's ETH reserves to plummet, a scam worth about $300,000.
Spotlight on suspicious coins
In addition to the large number of fraudulent tokens, Solidus researchers also pointed out that certain "deceptively marketed and traded" cryptocurrencies infiltrated Base during its public launch in mid-July to August. Base initially had little traction. However, the sudden rise of coins like BALD has led to a surge in funding and user interest.
The meme-inspired cryptocurrency surged a staggering 4,000,000% after its launch, raking in a whopping $68 million in revenue from traders. Additionally, the masterminds behind BALD reportedly amassed more than $5.2 million by promoting the token on X. They also inflated the token’s value on a Base-related DEX called LeetSwap.
A Solidus spokesperson suggested in an interview with reporters:
“Before diving into any decentralized application, whether on BASE or any other platform, consumers should exercise the same caution they would online.”
While admirable, Base’s openness also comes with inherent risks. These make it a lucrative playground for scammers. Solidus analysts urge users to remain vigilant, especially with meme coins and DEXs on this second-layer platform. Losses incurred by fraudulent schemes are unique to these decentralized exchanges, leaving victims with no recourse for retrieval or withdrawal. #Coinbase #Layer2