Tech & Crypto

BEAST MASTERS: Rug Pull Scam with NFTs

Por 24 julio, 2023 No Comments

Even though we think that scams and scammers in the blockchain technology universe arenot so relevant and that all sectors are exposed to abuse of trust, some cases related to projects which had nothing to show behind their front end became particularly famous and lead us to focus on them. It is important for the community in general to be aware of these mechanisms to avoid being fraud victims and to protect their interests as well. An active and alert community will help to combat this type of fraud.
More cases become publicly known as crypto adoption and transactions’ volume increase, resulting in more defrauded investors with higher amounts involved (but not in a higher percentage of the total value operated). We have covered this issue in our article on the frequency of NFTs scams and when speaking about the importance of cybersecurity. On this opportunity, as we did before, we present you an Argentine case: Beast Masters.
We recommend you to watch the video posted by KmanuS88. In this particular case, the community itself suspected of fraud and, based on the claims presented, the Judiciary and big players like Binance reacted quickly, freezing funds.
This project was supposed to be an online game in developmentthat required a token to access certain features. This token was bought by investors and gamers as well. Scams generally consist of two elements: on one side, deliberate misrepresentations regarding the promises made; on the other side, artificial lack of liquidity. In this case, both elements converged, according to the prosecutors.
This fraud was detected by the community itself and a complaint was filed accordingly. The game was visually attractive (with fancy graphics but without real content) luring investors to pre-purchase the project by investing in the token before launching it (in a normal project, price drives up upon launching). Then developers withdrew all received amounts and abandoned the project (crypto fraud known as “rug pull”).
It is of high importance where funds were sent to. Almost 100% of the funds were transferred to wallets of a centralized exchange (Binance) that has KYC procedures and personal data of the wallets’ owners. This fact was quite important in order to identify the recipients of such money (people linked to the developers). Upon filing the complaint, the community acted promptly and, based on our recommendation to recover stolen funds, some actions were taken with immediate effects: funds were frozen by Binance and raids were conducted on the prosecutor’s orders by the cybercrime unit in many jurisdictions throughout the country.
Immediately after the rug pull, the project closed all social media accounts and contact channels and its web site as well (reinforcing the idea of fraud). After complaints were filed, developers reactivated their accounts in all their platforms arguing to have been hacked and that funds had been transferred to their wallets “to safeguard the investors’ money”. We understand this argument will be used by the defense in the pending trial.
Such a booming news was covered by specialized media such as BeInCrypto. The first article was published by La Nación (mass media in Argentina). Even though we do not stick to some concepts, our congratulations for the scoop. iProUp is another relevant media that covered the case and is making a follow-up at the same time. Scammers are not in jail for the time being but they cannot leave the national territory. I take the opportunity to thank iProUp for consulting us for one of their articles.
According to the available information, five people have been accused by the prosecutor’s office: three of them are under investigation for fraud and the other two have been accused for money laundering (for being the owners of the recipient wallets).
Form our blog, we will keep an eye over cases like this. However, we stress the importance of an alert community ready to detect bad actors within the market. Less profitable crypto frauds will discourage these mechanisms (resulting in less defrauded investors and demanding higher investment to develop fraudulent crypto projects).

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