Ethereum: Anatomy of a Carpet Sweep
In the world of cryptocurrencies and smart contracts, carpet sweeping is a devastating scam that can leave investors financially devastated. It’s essential to understand how these scams work before they happen again. In this article, we’ll delve into the details of a notorious Ethereum-related carpet sweeping case and explain how it went down.
Case Study: 0xc964b291928bb6729b0c757545b68f3738235a75
The carpet sweeping in question took place on Binance Smart Chain (BSC), a blockchain-based platform derived from Ethereum. The scam involved a group of individuals creating and operating a fake Ethereum-like protocol called “Paxos” on BSC. Paxos was essentially a Ponzi scheme that preyed on unsuspecting investors by offering unsustainably high returns.
The pool was 100% locked
One of the key aspects that contributed to the success of this scam was the use of a “locked pool.” A locked pool is a mechanism in which all funds are locked up and cannot be transferred or withdrawn. This creates a situation in which investors are trapped and have no way to recover their losses.
In the case of Paxos, the pooled funds were 100% in a central wallet controlled by the scammers. This meant that if anyone tried to withdraw their funds, they could face significant penalties and even lose access to their funds altogether.
The Address
The specific address you mentioned, 0xc964b291928bb6729b0c757545b68f3738235a75, appears to be part of the scam. This address is likely related to the Paxos protocol, as it shares the same name and ticker symbol.
How Scams Like This Work
To put things into perspective, let’s look at how scammers like the one responsible for the Paxos scam typically operate:
- Creating a Fake Product or Service
: Scammers create a convincing product or service that appears legitimate and appealing to potential investors.
- Buying a Large Number of Tokens or Assets: They buy up huge quantities of these items in anticipation of high demand and subsequent price increases.
- Convincing Investors to Invest: Fraudsters advertise their fake products or services, offering unusually high returns that seem too good to be true.
- Locking Funds
: To prevent investors from withdrawing their money, fraudsters lock the funds in a central wallet or vault.
- The Fraudster Disappears with the Profit: Once the scam is launched, the fraudsters disappear, taking their ill-gotten gains with them.
Protect Yourself
To avoid becoming a victim of scams like this:
- Do Your Due Diligence: Before investing in any project or asset, do your due diligence by researching its legitimacy and potential risks.
- Beware of unusually high returns: If an investment seems too good to be true, it probably is.
- Never invest in a product or service without understanding the underlying technology or economics.
By being aware of these tactics and taking steps to protect yourself, you can minimize your risk and prevent scammers like the ones in this case.
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