Coinbase’s In-House Blockchain Launch Followed By Impersonation Tokens
Coinbase launched its own Layer-2 blockchain yesterday, built in collaboration with Optimism in its OP stack.
The new Layer-2 blockchain, named Base, will host many of Coinbase’s on-chain products and offer EVMs at low costs to developers.
Piggybacking on Recent News
Unfortunately, opportunistic bad actors are once again trying to make a quick buck off of the success of other firms. Not even a day after Base was launched, Solidus Labs announced via their Token Sniffer website that at least four new tokens had been identified, all with names playing on Coinbase’s new product, such as Base Token and even the very generically named “Coin Chain.”
SCAM ALERT: Since @coinbase‘s testnet launch of @BuildOnBase, four impersonation tokens have been created to capitalize on the hype surrounding the Layer 2 network.
The tokens’ details: pic.twitter.com/LnQJfMCoZw
— TokenSniffer.com (@Token_Sniffer) February 23, 2023
These tokens attempt to give off an air of legitimacy, hoping to lure gullible users into buying their tokens before realizing that they have nothing to do with Coinbase. Unfortunately, there is an even bigger issue at play: according to Token Sniffer, 3 of the 4 tokens in question appear to be honeypots.
In the crypto world, a honeypot is a smart contract that does not allow anyone but the contract creator to withdraw funds once they are deposited in the wallet, meaning that even if a user realized that they were scammed, they could not do much about it.
One of these tokens, BASE, spiked by 250%, according to Coinmarketcap, reaching the price of $7.05 – bringing the coin’s market capitalization to approximately $1 million – before crashing back down to about $2 at the time this article was written.
Additionally, Coinbase has stated that they have no intention of releasing any token affiliated with this new blockchain – so any further tokens of this sort can be dismissed as a fraud out of hand.
Market Immaturity
Unfortunately, new tokens attempting to cash in on market hype have been made repeatedly, revealing a certain market immaturity in the crypto sphere, according to Bloomberg.
According to Darius Tabatabai, the founder of the Vertex Protocol DEX, users who buy these tokens are either misled by the name or are simply falling for fraud.
“Coins being minted on the basis that they sound like a substantial project but are only taking advantage of a news cycle is a sign of lingering immaturity in digital assets. Anyone buying these is either making a mistake with a protocol that does something totally different or is just falling for a deliberate fraud.”
Scams like the infamous Squid Game Token are the most brazen, but the more recent examples of AI-centric tokens attempting to capitalize off of the recent rise in interest in AI also come to mind. These issues are further exacerbated by bots buying up new tokens on the spot, as notorious prankster Avraham Eisenberg demonstrated.
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