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

While honeypot scams target lesser informed people, rug pull scams are when cybercriminals abandon the projects after stealing capital from victims.

By Radhika Parashar | Updated: 29 December 2021 17:25 IST

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

Photo Credit: Reuters

Crypto scams has costed investors over $7.7 billion (roughly Rs. 58,697 crore) this year

Highlights

The scammers involved in this attack remain undisclosed
Fake MetaMask token was released on Uniswap platform
Crypto enthusiasts have posted findings on Twitter

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.

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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.

Code was injected into the title and description of the token on dextools which the website executed, resulting in the token displaying a "verified" status. pic.twitter.com/4jjNmFltZB
— coby.eth (@cobynft) December 27, 2021

Really depressing. Dude tries to ape a coin 7 times upping ante each time. Fails each time. Gets in his entire net worth on the last go. Coin was a fake metamask token. Dextools exploit. Unsellable. What you're seeing here is a star going out pic.twitter.com/oDQXIVIuST
— Jeremy (@lindyape) December 27, 2021

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.

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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.

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Further reading: MetaMask, Cryptocurrency, Rug Pull, Ethereum

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More