According to the latest report shared by blockchain security platform CertiK with Cointelegraph, on October 10, the development team of the game project FinSoul implemented a so-called exit scam and defrauded investors of $1.6 million through market manipulation.
The FinSoul team allegedly hired paid actors to pose as its executives and then raised funds for the sole purpose of developing a gaming platform. However, instead of actually creating the platform, the FinSoul team allegedly transferred $1.6 million in bridged Tether (USDT) from investors to itself. Blockchain data shows that the developers then laundered the money through the cryptocurrency mixer Tornado Cash. Surprisingly, this is not the first time allegations of misconduct have been leveled against FinSoul developers.
On May 23, decentralized finance (DeFi) project Fintoch publish A press release claims that it has used “advanced technology to develop the US-based FinSoul Metaverse platform” and has “launched it online.” The announcement stated that the company is using “advanced technologies such as Unreal Engine 5 and Cocos 2D” to develop game content such as “sandbox world, multiplayer sports, casual experience, player socialization, MMORPG” and other types of game content.
On the same day, on-chain detective ZachXBT report The original Fintoch DeFi project conducted an exit scam. ZachXBT claimed that the team appeared to have stolen $31.6 million and connected it to the Tron blockchain in an attempt to launder the money.
In response, CertiK claimed that the team underwent a “rebranding” in August, changing its name and social channels. “Fintoch” became “Standard Cross Finance (SCF)”. CertiK produced a graphic showing the key executives of Fintoch and Standard Cross Finance, who look identical.
CertiK claims to have verified the real names of the project’s chief executive, chief operating officer and chief financial officer. It is understood that these “senior executives” are actually actors working in the entertainment industry. Additionally, CertiK claims that the project’s CTO is listed on a promotional poster for an entertainment company, providing evidence that he is also a paid actor. It was unable to identify two other people who identified themselves as “senior executives.”
According to reports, the renamed “Standard Cross Finance” team continues to promote FinSoul on YouTube and Telegram. Its marketing campaign included a video depicting the so-called “R&D headquarters,” which later turned out to be an office building on East Hamilton Avenue in Campbell, California. It also produced a video of a promotional event it said was held in Vietnam.
The team page on the Fintoch website names “Bobby Lambert” as CEO, but he doesn’t actually exist and is instead a paid actor.
The Singapore government and Morgan Stanley had previously issued warnings about the investment plan. pic.twitter.com/SLxvOCPj1s
— ZachXBT (@zachxbt) May 23, 2023
According to blockchain data, the project Deployed Its token contract was released to the BNB Smart Chain Network on October 10. Upon deployment, 100 million FinSoul (FSL) tokens are minted and transferred to the deployer’s account. The deployer then sent 3 million FSLs to other accounts through multiple transactions, leaving 97 million FSLs still in its possession.One of the transfers was 210,000 FSL to address These tokens are then used create FSL liquidity pool on PancakeSwap. Since then, traders have used this pool to buy and sell FSL.
related: Cardano stablecoin project loses investors’ money before it gets under the rug: report
Data from DEX Screener shows that FSL’s price was initially set at $0.3911 per token at 6:30 a.m. UTC on October 10. Over the next few hours, the price rose to $17.5774 before falling back from that peak and settling around $5 over the next few hours.Then, between 4:30 and 5:00 PM UTC, the price suddenly collapseddropped from about $5 to nearly zero.
The two events appear to have occurred between 4:25 and 4:35 pm UTC on October 10th, and may explain the sudden price drop.At 4:25 p.m., the FSL deployer account transferred the remaining 97 million FSL to another account address.4:35 PM, this account Sell All 97 million tokens were transferred to the liquidity pool, and $1.6 million worth of Binance-pegged USDT was transferred from the liquidity pool to the account. The sale is equivalent to 32.33 times the number of FSL tokens previously in circulation.This account will then transfer in Transfer lost funds to Tornado Cash through a series of transactions.
According to CertiK, despite running out of investor funds twice, the Standard Cross Finance team managed to convince investors to invest in its project again. Now it has relaunched FSL with a new token contract. At the time of writing, DEX Screener programme The new version of FSL is worth $1.29 per coin.
Cointelegraph reached out to the Standard Cross Finance team but had not received a response as of press time.
FinSoul’s story is a reminder that cryptocurrency investors should investigate new projects before committing money to them. If CertiK’s report is to be believed, it means the scam team defrauded investors not just once, but twice, and is currently trying a third scam. Investors should remember to conduct due diligence before investing in a blockchain project that is not functioning properly.
related: Pond0x DEX claims $100 million in trading volume, critics call it a scam
“Rug pull” or exit scams pose an ongoing problem in the decentralized finance space. Arbitrum-based protocol Xirtam allegedly stole more than $3 million from investors through token sales this summer. In this case, Binance successfully froze the funds and began returning funds to users through smart contracts on September 6.
However, most victims of pulling incidents are not so lucky. In June, the DeFi project Chibi Finance deleted more than $1 million in user funds through the “panic” function, and these funds have not been recovered yet. In 2021, the PopcornSwap exit scam cost investors over $11 million and sparked criticism of the BNB Chain development team that continues to this day.
Collect this article as NFT Save this moment in history and show your support for independent journalism in the cryptocurrency space.
Svlook
