Cybercriminals Exploit Olympic Hype to Lure Investors with Fake Crypto Tokens

The Olympic Games that ended yesterday in Paris became an opportunity for cybercriminals to spread fake cryptocurrency projects, which, exploiting the reputation of this sports event, tried to lure unsuspecting investors. According to data from Trend Micro, at least 10 such crypto projects were detected. Scams involving fake tokens will stay with us for longer and it’s worth learning how to protect against them – warned Binance recently, which is the largest cryptocurrency exchange in the world and a leading blockchain ecosystem.

As Binance explains, fake tokens are a type of fraud in which criminals offer to buy and trade tokens pretending to be real cryptocurrencies. This leads to financial losses or other negative consequences, such as identity theft.

How swindlers use fake tokens?

Real tokens and their fake duplicates can coexist on the same blockchain but with different smart contract addresses, or on different blockchains. Fake tokens can be used in various scams.

• Initial coin offerings (ICO) and token sales: Scammers may launch fake ICOs or token sales, tempting investors with the promise of early entry into a groundbreaking project. After collecting funds they disappear, leaving investors with worthless tokens.
• Airdrops and giveaways: Fake tokens are sometimes distributed via airdrops or giveaways, where users are asked to provide personal information or pay a small fee to receive tokens. This can lead to further scams or identity theft.
• “Pump & dump” schemes: Swindlers can artificially inflate the price of a fake token through coordinated purchase (pump) and then sell their assets at the peak (dump), leaving other investors with worthless tokens.
• Frauds related to tokens offered on launchpools of renowned exchanges: The above-defined schemes can be complicated and costly to implement, hence swindlers may opt for lower-cost attacks, leveraging the hype created by the promotion and distribution of an asset by a reputable exchange. On such occasion, they offer tokens at discounted prices through unofficial channels, which are not affiliated with the platforms conducting the original promotion.

Real cases

In July 2024, the Binance risk intelligence team identified a token named BOOM, listed on DEX, as an attempt at fraud. An analysis of this token’s specifications raised several red flags, leaving no doubt about the deceitful nature of this project.

In 2024, Binance also promoted many new tokens via its Binance Launchpool platform. Scammers worldwide tried to exploit these events to create fake tokens. For example, popular schemes were “presale” programs conducted via unofficial channels, such as Telegram or WeChat groups. Binance points out that too attractive prices of highly anticipated tokens before their launch should be considered a red flag.

Tips on identifying and avoiding fake tokens

According to Binance, scams involving fake crypto tokens can be easily avoided by following the tips discussed below.

• Verify the contract address: each digital token has an associated smart contract address. Always obtain the contract address from official sources, such as the project’s website, verified social media accounts, or reputable cryptocurrency valuation platforms, such as CoinMarketCap or CoinGecko.
• Use risk assessment tools: contract code analysis, swap analysis, and liquidity analysis are the most basic methods of detecting risk associated with tokens, but they require a certain level of coding skills and blockchain knowledge. Users who are less familiar with the technical aspects of digital assets should rely on consumer tools designed for risk assessment. For instance, Token Sniffer is an easy-to-use and convenient tool that can help identify risk.
• Stay up-to-date with risk news: The best way to reduce the risk associated with scams in the cryptocurrency space is to follow the latest events in the industry. This will help better recognize threats and avoid scammers.

Fake tokens pose a serious problem in the cryptocurrency space because they exploit investors’ enthusiasm and their willingness to explore new opportunities when new tokens emerge. By being aware, conducting thorough research, and acting cautiously, you can protect yourself from falling victim to these scams. Always remember the old rule: if something sounds too good to be true, it probably is – states Binance.