HomeCrypto“Infected with Fraud” – Projects claim CoinMarketCap airdrops were scammed
“Infected with Fraud” – Projects claim CoinMarketCap airdrops were scammed
January 10, 2023
Two cryptocurrency projects have alleged foul play over promotional launches conducted by CoinMarketCap (CMC) on their behalf, which they say were “cheated” for the benefit of a small group of pimps.
These promotional launches, designed to be rolled out to thousands of wallets to raise awareness of a crypto project, ended up with the tokens funneled to only a handful of wallets, suggesting potential system manipulation.
Release of SATT tokens
Blockchain advertising solution SaTT told Cointelegraph that a promotional airdrop conducted by CMC in December 2022 resulted in 84% of tokens being airdropped to just 21 wallets.
The promotion was intended to see 25,000 winning wallets receive 4,000 SATT each, worth $6.30 at the time according to CoinGecko data.
However, SaTT said that shortly after the airdrop was rolled out, 20,953 wallets “automatically transferred tokens to 21 wallet addresses” who then sold their token holdings days later on or around Dec. 10, making about $142,000 for those 21 wallet owners.
The sell-off caused SATT’s price to plunge 70% between the end of the December 1 airdrop and the time wallets sold their tokens on December 10.
Issuing TokenBot Tokens
A similar experience was shared by TokenBot co-founder Shaun Newsum, who told Cointelegraph that he carried out a similar CMC-led airdrop of his TKB token on Dec. 9.
Newsum said CMC provided its 30,000 airdrop winners, but chose to “stagger” the airdrop “in case something happens.”
TokenBot sent its tokens to a group of 4,000 winners to get started, but about 3,300 ended up sending the funds to a wallet, Newsum said.
Newsum said TokenBot lost about $20,000 in the crash and the project had to divert more cash from its treasury.
“Obviously someone figured out how to play CMC,” he added. “If we had to ship in bulk, the whole airdrop would have been a complete disaster.”
Newsum, however, said he received an apology from CMC and was told it was investigating the airdrop and would be back with an updated list of winners for the project.
In its investigation, SaTT says it found 18 other tokens or non-fungible tokens (NFTs) launched by CMC since July 2022 that were also allegedly “infected by fraud” to the tune of $6.6 million.
This included airdrops for projects including TopGoal, OwlDAO and AgeofGods.
SaTT theorized two possibilities of how the “fraud” occurred:
“Or a group of hackers injected tons of fake accounts [into the airdrop on CMC’s website] […] or was it actually an inside job.
Speaking to Cointelegraph, a CMC spokesperson addressed some of these claims, arguing that at least four of the projects identified by SaTT have yet to hand out prizes, meaning it would be “impossible” for them to tackle “malicious” activity.
He also noted that while three projects, including SaTT, AgeOfGods, and TokenBot, have spoken to the CMC team about their concerns, he has not received any communication from other projects about the alleged issues.
However, the spokesman acknowledged that “robots are a problem that affects almost all sectors”.
“The industry has been dealing with this problem among airdrop programs for some time and the reality is that no single industry has been able to completely solve the bot problem.”
“We are continually working to improve our systems and services to mitigate this issue and will work closely with these projects to find solutions and help address any current issues,” the spokesperson added.
Related: Crypto recovery requires more aggressive solutions to fraud
CMC added that any claims of bot participation in its launches are being taken “very seriously” and are “working to resolve each case individually.”
He also shared several features he used to discourage bot participation, such as a CAPTCHA challenge and email verification requirements for attendees. It is also developing two-factor authentication integration.
Cointelegraph has reached out to TopGoal and OwlDAO for comment but has not received a response as of publishing. AgeofGods could not be reached for comment.