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Over 500 Scam Tokens Deployed on Coinbase's Base: Report

Tim Fries

Published: August 17, 2023 10:11 pm

Last Updated: August 18, 2023 9:02 am

Base, a layer-2 blockchain that debuted earlier this month, has seen over 500 scam tokens since mid-July. According to on-chain data, more than half of these tokens let deployers mint an unlimited number of coins, causing significant price fluctuations.

Scam Tokens Accounted For $3.7M in Trading Volume on Base

Developers launched over five hundred scam tokens on Coinbase’s newly launched Base blockchain from mid-July to its public debut in August. According to crypto trade surveillance platform Solidus Labs, roughly 300 of these tokens allow creators to mint an unlimited number of coins, significantly affecting their prices. Solidus added that 60 coins blocked users from reselling them on exchanges.

As a result, the scam tokens accounted for around $3.7 million in trading volume on Base-based decentralized exchanges, which enable users to make direct trades with each other. The scammers secured about $2 million in profit, per Solidus’s calculations.

“Scam token creators feed on hype, promise, and price and volume manipulation.”

– Solidus said in a report.

The decentralized crypto solutions let anyone deploy a token, though detecting suspicious activity may be easier than in traditional finance, Solidus co-founder Chen Arad told Bloomberg. “Buzz is always a factor and naturally Base generated buzz which attracts scammers,” Arad added.

The BALD Token Fiasco

Apart from hundreds of scam tokens, a mix of other “deceptively touted and traded” cryptocurrencies are also deployed on Optimism-powered Base, Solidus noted. At the start of August, a deployer launched the BALD meme coin, raking in $5.2 million in profits after hyping the token on social media and inflating its price on LeetSwap, a decentralized exchange on Base.

The move was initially labeled as a rug pull – a sudden cryptocurrency scam where the creators of a project or token disappear with investors’ funds, causing a rapid and significant loss in value. Interestingly, the rug pull was linked to FTX and Alameda Research founder Sam Bankman-Fried, but those claims are yet to be proven.

Meanwhile, on Sunday, the anonymous BALD deployer later transferred around $12 million in Ether (ETH) back to the Ethereum network. The deployer then deposited $3.87 million of ETH to the crypto exchange Kraken, marking the first time more funds were transferred out of the Base network than bridged in.

This article originally appeared on The Tokenist