Welcome to the Crypto Alert of the Week series by AMLT, a series dedicated to documenting interesting or high profile frauds/hacks which recently happened and have been reported into the AMLT Network.
This week we cover one of the simplest, yet notorious frauds in the crypto space – exit scams. An exit scam revolves around tricking people into investing in your project and then using your reputation to get a hold of the invested assets. The next step in this space is usually faking a hack and/or government intervention that is supposed to explain the sudden disappearance of funds followed by the vanishing of the company’s and its employee’s sites and profiles. One of the most memorable examples of that in the crypto world would be the infamous Bitconnect ponzi scheme, which in January, this year, ran away with nearly $2.5 bln in customers Bitcoins, leaving their customers with worthless tokens.
On October 29th, one of the founders and project designers of the Oyster Protocol project, a person under a pseudonym “Bruno Block” used a trapdoor function in its smart contract in order to mint new tokens. After that, all of the fresh PRL tokens were transferred to KuCoin, a fairly popular, Singapore-registered cryptocurrency exchange, where they were sold for approximately $300,000
These Bitcoin Multipliers highlight another of the countless potential ways that cryptocurrency users around the world can use the AMLT Network to help prevent these sort of actors from reaping the spoils of their dishonest work. So how did we confirm this one was in fact fraud? Below we show you how this process works and what is the end result through a Coinfirm AML Risk Report.
By looking at a few of the addresses that have paid into the “mulitiplier” address, none of them after an extended period of time received any funds back let alone profit.
Once the address and related proof (screenshot) has been submitted into the AMLT Network, the Coinfirm data analytics team analyzes and verifies if the data submitted is legitimate. If it is it gets submitted into the Coinfirm Platform with appropriate new flags and risk indicators. As you can see below in the most recently generated risk report on this address. Now any of the countless commercial users of the Coinfirm AML Platform around the world can reject these funds originating from fraudulent actions and help limit the incentive of bad actors to do them in the first place.