Scams have widely proliferated in the crypto space, with supposed skyrocketing tokens achieving monstrous gains in so short a time before that sinister rug pull steals investors' hard-earned money away.
Now Ethereum users have been victimized by the same modus operandi, through a supposed airdrop from a new project called EtherWrapped.
EtherWrapped launched a token airdrop in the morning of New Year's Eve with transaction history analytics for users to track, CryptoBriefing.com reported. This airdrop was supposed to provide eligible Ethereum user recipients the project's YEAR token by 02:30 UTC. These tokens were distributed based on the user's on-chain activity, and as such, more active users should get more tokens.
EtherWrapped Scam: What Happened?
EtherWrapped made the airdrop known from its now-deleted Twitter account. The project's unidentified team members also had the token contract verified on Etherscan to make the airdrop appear authentic. The EtherWrapped airdrop also came after two legitimate airdrops from OpenDAO and GasDAO, which were launched the past week, apparently to take advantage of the rising hype for new tokens. Around 4,500 users claimed the airdrop and wanted to trade their YEAR tokens on the decentralized exchange Uniswap.
Then about four hours after the airdrop was deployed, at around 06:00 UTC, the token's price plummeted to near zero. After the incident, users said the EtherSwapped team had done a rug pull through a so-called "bait-and-switch." One user, MyCrypto chief marketing officer Jordan Spence, who took part in the airdrop, chronicled the event, tweeting that he could not "sell/send" and "can only buy" the $YEAR token.
Rug pulls happen when project teams abandon their projects and run off with the investors' money. They are quite common in decentralized finance projects, wherein the questionable projects would sell a large share of their token supply after establishing a community of investors. Their abrupt removal of liquidity on the decentralized exchanges lead to a crash in the token's prices.
EtherWrapped Team Tricked Investors With Malicious Honeypot Scam
For this particular incident, the creators of the token contract concealed a smart contract function named "revokeOwnership." These creators assigned the Uniswap V2 contract address as the new owner, causing holders to be locked out from selling their assets. This led to a "honeypot" dynamic, wherein investors could still purchase the token but could not sell it. Because of this, the token price had increased and attracted buyers. Then the EtherWrapped team sold their share of the $YEAR tokens and ran away with more than 30 ETH in different transactions.
The incident is quite similar to the SQUID token rug pull in October, wherein the unscrupulous team behind the project used the success of the Squid Game Netflix series to gather investors. When the token skyrocketed 300,000 percent in a week, SQUID lost 99.99 percent of its value and the team ran off with around $12 million in investor money.
Now, $YEAR fell from a surging price of $0.0007 to almost zero, with the EtherWrapped team vanishing and pocketed a total of 59.7 Ether (ETH) or $225,000 in current prices, Cointelegraph noted in a report.
