Memecoin fraud still on the rise, new report from PeckShield

PeckShield detects more fraudulent memecoins involved in rug pulls, warns of 24 new tokens

A frog dressed as a human carries bags in a crowded place
The popularity of memecoin rug pull scams does not seem to be waning

Yesterday, blockchain security firm PeckShield announced on Twitter the discovery of 24 new scam memecoins created within ten days. According to PeckShield SEI, SHITMEME, BENS, TAGGED, WorldCoin, TINDER, MONKEYS, TEMU, ERDR, FOG, MAGNETO, POPCAP, STARK, PORN, ZAT, Miniclip, LADYBOY, POGO, WLD and USACOIN were involved in the scams.

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PeckShield emphasized that some memecoins existed for only a few hours. For example, the scammers behind SEI removed the token's liquidity about three hours after its creation.

"The scammers initially funded 5.19 ETH from OKX, pumping the token price to trick folks and subsequently draining the pool," the cybersecurity company explained, warning its Twitter followers not to fall for the tokens, especially BEREAL, the latest discovered scam memecoin at the time of the publication of PeckShield’s post.

Just over a week ago, PeckShield discovered fourteen fraudulent memecoins, including PEPELOL, PEPEPE, NEWPEPE, TURBOO, LADYS, PEN, BENZ, BENEN, and GGBOND.

This May 15 Twitter announcement came after May 11 PeckShield’s warning, when the Web3 security firm notified the crypto community of the discovery of ten new scam meme tokens. At the time, PEPEDODGE, PEPEC, NEWPEPE, BOBO, POP, WOW, BMW, MEME, and FOUR were on PeckShield's list of rug pull schemes.

Even though the recent memecoin leader PEPE has experienced a significant loss of value and is now trading at $0.00000148, compared to its record price of $0.00000421 on May 5, many crypto users still see great potential for meme tokens to generate large returns. The crypto community's eagerness to invest in memecoins continues to encourage malicious actors to develop their scam schemes, which include phishing scams promoting fake memecoin airdrops and pump-and-dump scams.

It is obvious that scammers are trying to leverage the success of PEPE to draw more attention to their tokens. Naming their memecoins with variations of the word "Pepe," the name of the cartoon frog that inspired the creation of the original coin, can be quite misleading for inexperienced traders.

Some Twitter users even ironically noted that, although the rug pull scheme is illegal, its persistent popularity gives the impression that this malicious activity is not punished effectively, making it seem to be "a great way to earn money faster."

Read also: TRM Labs reports a 70% decrease in cryptocurrency hacks compared to Q1 2022

Memecoin scam professionals

There have been many other reports of memecoin scams from Internet sleuths. Some of the cases are particularly harrowing, such as the activity of a mysterious person who created 114 fraudulent memecoin tokens in less than two months, according to ZachXBT's April 26 tweet. Each time, the stolen money was sent to the same deposit address 0x739c58807B99Cb274f6FD96B10194202b8EEfB47.

Another example of an especially active scammer was mentioned by a crypto influencer with the Twitter nickname CoinGurruu, who recommended their followers flag the KuCoin address 0xCc16D5E53C1890B2802d5441d23639CAc6cd646F. This particular scammer managed to launch up to five memecoin rug pulls daily during a two-year period.

According to on-chain analyst JamesT0lan, the total number of memecoin scams committed by this individual until April 27 had exceeded 1,100, while the amount of stolen funds deposited on KuCoin by the malicious actor surpassed $13 million.

More tokens raise suspicion

While cybersecurity companies and individual on-chain analysts are doing their best to detect fraudulent memecoins and warn the crypto community about these projects, reputable centralized crypto exchanges are monitoring the trading pairs and assets they offer. Thus, after delisting NEBL, AUTO, and QLC and removing spot pairs WRX/BTC, FTM/BRL, and JASMY/EUR, Binance announced its plans to remove twenty-one more trading pairs on May 26.

Interestingly, these pairs include the Australian dollar (AUD). This particular move may have been made by the exchange to protect itself during the regulatory challenges it is currently facing in Australia.