BlackRock issued a warning to investors about a surge in crypto scammers impersonating their representatives on social media, targeting those interested in their Bitcoin and Ethereum ETFs. Meanwhile, independent blockchain sleuth Wazz identified the Neiro token on Ethereum as a potential honeypot scam. Compound Finance is also in the middle of a governance crisis after a contentious proposal passed. Additionally, Citron Research founder Andrew Left has been charged with securities fraud for allegedly manipulating stock recommendations while UK hacker Elliot Gunton was sentenced for compromising over 500 Coinbase accounts.
Scammers Impersonate BlackRock
BlackRock, the New York-based asset management giant, recently issued an alert about a surge in crypto scammers targeting investors in its iShares spot Bitcoin and Ether exchange-traded funds (ETFs). On July 29, BlackRock advised investors to avoid interactions on social media with people or entities posing as BlackRock representatives.
These scammers often lure victims by offering training or investments, directing users to crypto investment-related websites and platforms like WhatsApp or Telegram. BlackRock pointed out that it never contacts users through social media to demand payments or offer investments.
The rise in scams comes as BlackRock’s iShares Bitcoin Trust (IBIT) has attracted some impressive investments, amassing $19.7 billion in Bitcoin within roughly seven months since its launch in January. This positions IBIT as the leader in total inflows, surpassing all nine other United States-approved spot BTC ETF providers combined.
Robert Mitchnick, BlackRock’s head of digital assets, recently shared that there is a strong client interest in Bitcoin and Ether, but very minimal interest beyond these two cryptocurrencies. At the Bitcoin 2024 conference, Mitchnick mentioned that clients predominantly focus on Bitcoin, with some interest in Ethereum. He predicted that investors might eventually allocate around 20% of their crypto holdings to ETH, with the majority going to BTC.
Neiro Token on Ethereum Raises Red Flags
BlackRock investors are not the only ones being targeted by scammers. Independent blockchain sleuth Wazz issued a public warning on July 28, identifying the largest Neiro token on Ethereum as a potential honeypot scam. Wazz is known for uncovering the $870,000 hack of billionaire Mark Cuban’s hot wallets.
Although the preliminary investigation was inconclusive, Wazz’s post shed some light on several concerning aspects of the project, including the lack of contact information for the developer(s). Wazz identified a specific Neiro meme token with the Ethereum address “0x3ad4f189f08cdc60496eeBb3bd70B90dF28B7455” as suspicious. He pointed out that the token bypasses most automated scan tests but that the owner frequently calls AutomatedMarketMaker with addresses, modifying the transfer function and potentially blacklisting new buyers.
According to blockchain analytics site Quick Intel, the Neiro coin in question has a market cap of approximately $31 million. The project has not been “renounced,” which means the owner still has control over functions that could manipulate the token or restrict users from managing their funds.
Some other additional red flags include the token’s direct connectivity to wallets outside its ecosystem and the absence of a locked liquidity pool, raising the risk that funds could be drained without notice.
Compound Finance Faces Governance Crisis
Compound Finance, a decentralized lending and borrowing protocol, is going through a community disagreement over governance issues, according to some recent forum discussions and proposals. The passage of proposal 289 on July 28 triggered allegations of a governance attack by a voting bloc called the “Golden Boys.”
Community insiders warned of such an event just days before, and the discussions revealed deep-seated concerns. On May 6, a proposal to invest 5% of COMP holdings into a “goldCOMP Vault” failed to reach quorum and was canceled. The goal was to create a wrapped COMP token called “GoldCOMP,” managed by the Golden Boys to generate passive income for COMP holders.
Golden Boy member Humpy explained that COMP deposited into the goldCOMP vault would yield semi-liquid goldCOMP tokens, which could then be placed in a Balancer pool to generate passive income. However, an updated proposal requesting 92,000 COMP for the goldCOMP treasury failed on July 19 as concerns were raised about the Golden Boys having sole control over the funds.
Wintermute Governance and Michael Lewellen of the OpenZeppelin bloc are concerned that the proposal would grant the Golden Boys undue power over Compound’s funds. Lewellen went so far as to label the actions of Humpy and the Golden Boys as a potential governance attack.
Despite these concerns, proposal 289 passed on July 28 with 682,191 votes in favor and 633,636 against, increasing the COMP requested for the goldCOMP treasury to 499,000 COMP, which is worth approximately $24.1 million. Proposal 290 suggests transferring the Compound Governance Timelock Admin to “CommunityMultiSig” to prevent future similar proposals, but it might be too late to stop the implementation of proposal 289.
Citron Research Founder Charged with Fraud
Andrew Left, the founder of Citron Research, has been accused of securities fraud by allegedly profiting $16 million through misleading stock recommendations. The United States Securities and Exchange Commission (SEC) accused Left of using social media and TV appearances to recommend stocks in which he had conflicting positions.
This ended up misleading retail investors by creating a false perception that his public comments aligned with his company’s trading activities, while in reality, he often acted oppositely. The SEC shared some details about instances where Left bought stock immediately after advising his readers to sell and sold stock after advising them to buy. This allowed Left to manipulate the market for short-term profits.
The SEC alleges that Citron and Left engaged in illegal trades and market manipulation between March of 2018 and December of 2023. The accusations involve 26 trades across 23 companies, including Nvidia, American Airlines, Alibaba, Meta , and X.
Additionally, the US Department of Justice announced a criminal case against Left, accusing him of securities fraud and lying to federal law enforcement about compensation from hedge funds. If convicted on all 18 fraud-related charges, Left could face up to 25 years in prison.
This indictment comes after Left’s strong criticism of the crypto industry, which he called fraudulent in July 2022. Recently, Citron Research also advised investors to short Coinbase stock after a temporary outage on Feb. 28, suggesting a Bitcoin long position through a spot exchange-traded fund while shorting the crypto exchange.
UK Hacker Sentenced for Coinbase Phishing Scheme
Meanwhile, UK hacker Elliot Gunton has been sentenced to three and a half years in prison for compromising more than 500 Coinbase accounts through phishing websites in 2018 and 2019. Gunton was 17 and 18 at the time, and pleaded guilty to conspiracy to commit fraud and money laundering after stealing over $900,000.
Gunton previously made headlines for stealing TalkTalk customer data and hacking high-profile Instagram accounts, but he avoided jail by completing a rehabilitation order and paying back £407,359.
In the United States, a federal court ordered Abner Alejandro Tinoco and his firm, Kikit and Mess Investments, to pay over $31 million for running fraudulent crypto and forex schemes. Tinoco misled clients, and used their funds for personal luxuries and operating a Ponzi-like scheme. The court mandated $6.2 million in restitution, $6.2 million in disgorgement, and an $18.8 million civil monetary penalty.
Additionally, the Washington State Department of Financial Institutions flagged Vims.One as a potentially fraudulent crypto platform. An investor complained about losing funds after being lured by promises of high returns.
This article was originally Posted on Coinpaper.com
