- Over 500 scam tokens emerged on Coinbase’s Base Layer-2 blockchain between mid-July and August 9.
- These dubious tokens contributed to around $3.7 million in trading volume, enabling scammers to pocket approximately $2 million.
Harnessing the Hype: The Rise of Scam Tokens
Coinbase, one of the premier cryptocurrency trading platforms, has been swamped with an influx of scam tokens. An in-depth analysis by Solidus Labs, experts in detecting crypto anomalies, unveiled that a staggering 500 scam tokens sprouted on the Base Layer-2 blockchain within a mere three weeks. These tokens bore intriguing names, from BASEPEPE [BPEPE] to Baby Yoda [YODA], aiming to captivate potential traders.
More than 500 scam tokens have emerged on Base, the blockchain launched by Coinbase earlier this month https://t.co/69Sfg9AmSm
— Bloomberg Crypto (@crypto) August 16, 2023
According to the report, a significant chunk of these tokens, approximately 300, offered their creators an unrestricted minting capacity. This essentially means these token creators could produce an unlimited supply, irrespective of demand, disrupting market dynamics. In another sly move, around 60 of these tokens enforced restrictions that prevented buyers from reselling them on other exchanges.
Distilling the essence of the report by Solidus Labs, it becomes evident that these scammers proficiently exploit market excitement, audacious promises, and manipulative tactics around price and trading volume. Their prowess at leveraging the “buzz” surrounding fresh crypto offerings yielded tangible results. The suspicious tokens drummed up an impressive $3.7 million in trading volume on Base DEXes, facilitating an illicit profit of about $2 million for their creators.
This surge in questionable tokens coincides with the recent introduction of Coinbase’s Base for developers, a move that inadvertently signaled the dawn of the meme-coin era. These volatile digital assets exhibited meteoric surges, with some even recording price hikes of an astounding 7,000,000%. Newly-formed, influential digital wallets have been at the epicenter of this activity. Take, for instance, the cryptically named HarryPotterObamaSonic10Inu, labeled as BITCOIN [a moniker distinct from the original BTC]. This particular crypto asset has skyrocketed by 182% this August alone, casting shadows over established meme coins such as Dogecoin and Shiba Inu.
🪄📷The biggest #memecoin on the block hasn't stopped its pumping ways. Despite many #altcoin retracements today, #HarryPotterObamaSonic10Inu price is now +182% in August. Watch volume & network growth (rise is good), & social dominance (rise is bad). https://t.co/NGd8rsWrek pic.twitter.com/ZMBXtAq4KU
— Santiment (@santimentfeed) August 16, 2023
Chen Arad, Solidus’ Co-Founder, emphasized that the allure of “buzz” invariably acts as a magnet for scammers. The Base network, with its undeniable charm, hasn’t been immune to this phenomenon. He insinuated that discernment and due diligence are paramount when dabbling with such tokens. Echoing Arad’s sentiments, a Coinbase representative advised,
“We encourage consumers to do their research diligently before participating in any dApp, on Base or any other chain, just as they would on the open internet.”