About 12% of BEP-20 tokens are based on smart contracts with fraudulent features. A similar situation is observed with ~8% of ERC-20 standard tokens.
Solidus Labs, which specializes in monitoring blockchain projects, launched Solidus Web3 AML, a new tool for analyzing crypto transactions. The service allows identifying market manipulation and monitoring risks and AML compliance in real-time.
This new tool made it possible for analysts to monitor 12 blockchains in the cryptocurrency space. As of October 10, 2022, Solidus Web3 AML detected 188,525 fraudulent smart contracts across various networks.
The experts found out that an average of 15 scam smart contracts are deployed on the network every hour, which is approximately one contract every four minutes. About 12% of them are associated with BEP-20 tokens on BNB Chain, and 8% are connected with ERC-20 tokens on Ethereum.
Kathy Kraninger, Vice President of Regulatory Affairs at Solidus Labs and ex-director of the U.S. Consumer Financial Protection Bureau (CFPB), reported that scam smart contracts they identified are programmed to steal funds via schemes like Rug Pull. A relatively “high-profile” example is the SQUID token by the Squid Game project. The smart contracts of such projects are “automatically deployed and easily repeated,” allowing scammers to quickly create thousands of fraudulent tokens.
This type of activity is difficult to track as the scale of each particular “asset” is typically small “without raising red flags” among centralized and regulated exchanges. The press release noted that scammers spent about $910 million worth of ETH via such sites under the supervision of the authorities.
Earlier this year, analysts identified over 50 scam projects on BNB Chain, which was later recognized as the network with the largest number of bots. In the first half of this year, BNB Chain became the leader in the number of hacks. Hackers successfully attacked it 47 times. However, the biggest theft within Binance this year was in early October, when hackers broke into the BSC Token Hub cross-chain protocol and stole digital assets worth more than $100 million.
