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

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.

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