More than $2 million in BNB and an unspecified sum of ETH were stolen from cryptocurrency investors by the “WallStreetBets Crypto Pumps” group on Telegram.
Members of the well-known WallStreetBets Reddit group were under suspicion for an alleged bitcoin scam that may have resulted in losses of at least $2 million. They deceived investors by establishing a dedicated Telegram group and promising amazing profits by taking advantage of the current boom in the cryptocurrency market.
The Basis for the Hoax
Bloomberg claims that users of the WallStreetBets Reddit community engaged in a clear fraud using the Telegram chat app. Before they are listed on cryptocurrency exchanges, customers have the chance to purchase new tokens verified as WSB Finance by using a special account named “WallStreetBets – Crypto Pumps.” A pre-mine sale is what this procedure is called.
The core of the deception is related to the current cryptocurrency bubble, as seen in the skyrocketing prices of Bitcoin and the majority of altcoins. Targeted WSB members enticed investors to pay money without asking any questions by promising 1,000% increases on certain digital assets, with the potential to generate enormous riches.
Additionally, before accessing its “token bot” to buy WSB Finance tokens, the controversial account advised users to transfer prominent cryptocurrencies like Binance Coin (BNB) and Ethereum (ETH) to approved crypto wallets.
The criminals, however, never distributed the coins. The sender of a payment must transfer the same amount again, or else they run the danger of losing their original investment, according to another Telegram message.
On Tuesday, May 4th, more than 3,451 Binance Coins were taken out of the wallet included in the Crypto Pumps messages after the prank was carried out.
The scam resulted in losses of more than $2.1 million since the cost of BNB at that time was about $625. Thousands of people vented their annoyance and attempted to identify the perpetrators of the fraud after it happened. Furthermore, it is still unknown how much ether, the other cryptocurrency, is worth.
Two weeks ago, WSB administrators issued a warning on offers that would attempt to appeal to the crypto audience by misusing the forum’s brand. Although the “WallStreetBets – Crypto Pumps” account has been deleted from Telegram, its administrator left behind a message that could shock the victims:
Crypto Scam Reports Skyrocket
The FTC said in a report released on Monday (May 17, 2021) that it has seen a rise in frauds using cryptocurrencies since October 2020. According to the FTS statistics, it received around 7,000 customer complaints between Q4 2020 and Q1 2021, during which time investors lost $80 million.
In the meanwhile, the agency received 570 complaints of cryptocurrency frauds between Q4 2019 and Q1 2020, resulting in losses of $7.5 million. When comparing the two times, reported cases rose by a factor of 12 while reported losses climbed by over 1000%.
In addition, according to the FTC, those between the ages of 20 and 49 “were nearly five times more likely to report losing money on cryptocurrency investment scams than older age groups.” “In contrast, those 50 and older were far less likely to report losing money on bitcoin investment scams,” the survey’s conclusion said. However, their reported individual losses were larger, with a median reported loss of $3,250, when this group did fall victim to these frauds.
The U.S. agency went on to describe the many con games that dishonest people used to seduce their victims. One of them included internet “giveaway scams” carried out by imposters. Investors paid Elon Musk impersonators more than $2 million in cryptocurrency during a six-month period, according to the FTC.
In fact, con artists have been known to use the fame of famous individuals as leverage to get others to contribute money. Back in July 2020, hackers were able to get into a number of celebrities’ Twitter accounts and trick users into submitting money to have their bitcoin quadrupled.
Investors Should be Wary of Bogus Crypto Investment Schemes
Fraudsters also use romance scams, in which a victim is tricked into transferring money to a con artist by pretending to be in a long-distance relationship. Investment scams were the most common approach, according to the FTC, to persuade consumers to give up their cryptocurrency.
A suspected crypto scam recently targeted user of the WallStreetBets (WSB) Reddit site. Unrelated to the subreddit group, an account named “WallStreetBets – Crypto Pumps” instructed people to pay ETH or BNB to obtain a token called WSB finance. The currency over 3,451 BNB, which was worth over $2.1 million at the time, was removed from the wallet even though the tokens were never delivered.
Scammers continue to look for new methods to steal from trusting people as bitcoin and other cryptocurrencies increase in popularity and value. Investors must DYOR (Do Your Own Research) before to participating in any cryptocurrency investment scheme.