Crypto Investors Duped of $1 Million via Bogus MetaMask Token, Scam Classified as Honeypot and Rug Pull

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Crypto firm MetaMask recently confirmed that it would soon airdrop its own crypto token $MASK into the wallets of its existing users. Following the development, an allegedly fake MetaMask token emerged in the crypto market, which became available for trading on the Uniswap platform. Within a small time period, this MetaMask token, built on the Ethereum blockchain, reportedly soared by 2,600 percent. As soon as the fake tokens worth $1 million (roughly Rs. 7.4 crore) were sold, the sale was locked raising a rug-pull scam suspicion.

The unidentified scammer(s), as per a report by CoinCodeCap, duped some people awaiting the launch of the MASK token with their bogus offering. The exact number of victims in this scam remains unclear.

The token could only be purchased and not sold, which was another reason why doubts around the token being a scam gained heat.

Some tech enthusiasts posted their personal investigation on Twitter, revealing that the fake token was given a verified status after scammers used DeFi tools site DexTools to do so.

As of now, DexTools has not commented on its role in not being able to filter out cyber criminals from misusing its platform.

The incident that is being classified as a “rug pull” scam is also being called a “honeypot” trick played out by crypto scammers. While honeypot scams target lesser informed people, rug pull scams are when cybercriminals leave their malicious projects after having collected the target amount of capital.

In a recent report, research firm Chainalysis revealed that scams mooched off over $7.7 billion (roughly Rs. 58,697 crore) from crypto investors this year. The most common form of scam was the classic rug pull, the report said.

Rug pulls are prevalent in DeFi because, with the right technical knowledge, it's cheap and easy to create new tokens on the blockchain and get them listed on decentralised exchanges (DEXes) without a code audit.

In November, for instance, investors of a new cryptocurrency called the “Squidgame Cash” or “SQUID” inspired by Netflix series Squid Games were apparently “rug pulled” after the token crashed by 99.99 percent overnight.

The scammers are believed to have collected around $3.3 million (roughly Rs. 22 crore) with this project. Investigations in the case are still ongoing.

Amid the global crypto expansion, cases of crypto-focused cybercrimes are also increasing in numbers.

Earlier in November, US' Federal Bureau of Investigation (FBI) said that cyber scammers are making innocent people use physical cryptocurrency ATMs and digital QR codes to complete malicious transactions and dupe them off their assets.

Recently, Hyderabad Police also warned investors against transferring assets into unknown, unauthorised wallets to escape getting scammed.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.


Binance Launches New Auto-Burn Mechanism for Binance Coin, to Replace Quarterly Burn Cycles

Binance, the cryptocurrency exchange which is currently the largest in the world has decided to drop its quarterly coin burn mechanism for a better, more transparent, and predictable token auto-burn mechanism for BNB, Binance's native token. According to the announcement, the move came as a result of increased demand for a healthier blockchain system from Binance Smart Chain (BSC) users and BNB communities. Until now, Binance had two BNB burning mechanisms in place, a real-time burning of a percentage of gas fees on the BSC and the other, a quarterly burn based on Binance's Accelerated Burn Program, which the BNB auto-burn mechanism replaces.

“We've been listening closely to the Binance Smart Chain (“BSC”) and BNB communities-and we are proud to announce the implementation of a new BNB Auto-Burn procedure effective immediately,” Binance stated in a blog post.

Coin burning is a common mechanism through which altcoin creators control the supply of tokens in circulation. In most cases, including Binance, the process removes from circulation BNB tokens by sending them into an inaccessible wallet. The burning process will be both verifiable and objective, following the deployment of the new system.

Similar to gas on the Ethereum network, BNB is Binance's native token and is used to fuel transactions on the Binance Smart Chain. However, Binance does not control or operate BSC, thus leaving BNB to be supported by a community of users and delegators.

The change also means that the amount of BNB burned will no longer depend on Binance's profit but on the price of BNB and the level of BSC activity. As mentioned, the change also aims to enhance the level of transparency and predictability of the BNB community when conducting transactions.

The new BNB auto-burn mechanism is expected to remove about BNB 1.69 million in a quarter and will be halted when the total circulation of BNB drops below 100 million.

“BNB Auto-Burn will be both objective and verifiable, independent of revenues generated on the Binance CEX through the use of BNB and will be automatically adjusting in that the burn amount will be based on the price of BNB, which, in turn, reflects the supply and demand for BNB, as well as the number of blocks produced during a quarter calculated based on on-chain information, ” the announcement states.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.