Crypto

“Infected by Fraud” – Projects Claim CoinMarketCap Airdrops Tricked

Two crypto projects have cried foul play over promotional airdrops conducted by CoinMarketCap (CMC) on their behalf, which they claim were “played” for the benefit of a small group of exploiters.

these promotional airdrops — designed to be distributed to thousands of wallets to publicize a crypto project — ended with the tokens funneled to a handful of wallets, suggesting potential manipulation of the system.

SATT token deposit

Blockchain advertising solution SaTT alleged to Cointelegraph that a promotional airdrop it paid CMC to perform in December 2022 ended with 84% of the tokens airdropped to just 21 wallets.

The promotion aimed to see 25,000 winning wallets receive 4,000 SATTs each, worth $6.30 at the time by CoinGecko Data.

However, SaTT claimed that shortly after the airdrop was distributed, 20,953 wallets “automatically transferred the tokens to 21 wallet addresses,” which then sold their token holdings a few days later around December 10, bringing in approximately $142,000 to these 21 portfolio owners.

The sell-off sent the price of SATT plummeting by 70% between the end of the airdrop on December 1 and when the wallets sold their tokens on December 10.

SaTT claims portfolio 0x929… (pictured) has over 4,500 transactions of its token, the largest it has found of 21. Blockchain data shows the wallet has sold over 4.3 million tokens via PancakeSwap. BscScan

TokenBot Token Deposit

A similar experience was shared by TokenBot co-founder Shaun Newsum, who told Cointelegraph that he did a similar CMC. airdrop of its TKB token on December 9.

Newsum said CMC provided its 30,000 airdrop winners, but chose to “stagger” the airdrop “just in case something happened.”

TokenBot sent its tokens to a batch of 4,000 winners to begin with, but around 3,300 ended up sending the funds in a portfolioNewsum said.

Blockchain data shows thousands of TKB transactions to wallet 0x5AF… before initiating an inter-chain exchange and then selling his holdings. BscScan.

Newsum said approximately $20,000 was lost by TokenBot in the incident and the project had to deploy more cash from its treasury.

“Obviously someone figured out how to play CMC,” he added. “If we were to send en masse, the whole parachute drop would have been a complete disaster.”

Newsum, however, said he has since received an apology from CMC and has been informed that he is investigating the airdrop and will return with an updated list of project winners.

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In its investigation, the SaTT claims to have found 18 other tokens or non-fungible tokens (NFT) airdrops conducted by CMC since July 2022 which were also allegedly “infected with fraud” to the tune of $6.6 million.

This included airdrops for projects such as TopGoal, OwlDAO and AgeofGods.

SaTT theorized two possibilities as to how the “fraud” occurred:

“Either a group of hackers injected tons of fake accounts [into the airdrop on CMC’s website] […] or it was actually an inside job.

CoinMarketCap responds

Speaking to Cointelegraph, a CMC spokesperson addressed some of these claims, saying that at least four of the projects identified by SaTT have yet to distribute rewards, meaning it would be “impossible” for them. to have been confronted with “malicious” activities.

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 regarding the alleged issues.

The spokesperson, however, acknowledged that “bots are a problem that affects almost every industry”.

“The industry has been dealing with this problem among airdrop programs for some time and the reality is that no industry has been able to fully solve the bot problem.”

“We are continuously working to improve our systems and services to mitigate this issue and will work closely with these projects to find solutions and help resolve any current issues,” the spokesperson added.

Related: Crypto Recovery Needs More Aggressive Fraud Solutions

CMC added that any claim of participation of robots in his airdrops are taken “very seriously” and he “works to solve each case individually”.

He also shared several features he’s used to deter bot participation, such as a CAPTCHA challenge and email verification requirements for participants. It is also developing a two-factor authentication integration.

Cointelegraph has contacted TopGoal and OwlDAO for comment but has not received a response at press time. AgeofGods could not be reached for comment.