Scammers have paved the way for Binance’s own blockchain. According to journalist Colin Wu, in four days, four projects on the Binance Smart Chain blockchain, claiming to be part of the decentralized finance (DeFi) space, performed an exit scam, embezzling user funds.
All projects used a liquidity mining model in which users are asked to provide liquidity in one asset in order to receive payments in another. This model gained popularity in the summer of 2020 due to higher payouts compared to other financial products and the rapid growth in the price of tokens of the respective projects. However, in the pursuit of quick rewards, investors have lost money more than once due to unscrupulous creators.
According to Wu, the Binance Smart Chain-powered Popcornswap project went into hiding with 48,000 BNB ($ 2.1 million) and SharkYield embezzled 6,000 BNB ($ 262,000). He also mentions the Zap Finance and Tin Finance projects without specifying the amount of damage.
Wu cites a statement from Binance security, which said they are investigating the Popcornswap incident and clarified that lost tokens may not be recoverable. Previously, Binance stated that the return of assets to victims in such situations is an unlikely event, and urged users to responsibly choose projects for investment.
In addition, according to Binance, it can freeze assets in USDT and BUSD stablecoins, but is unable to do so with BNB, which explains the choice of the exchange’s own token by scammers, Wu adds.
According to the publication, Binance promised to conduct audits of quality projects in the future and assign them an appropriate mark. Until such a system has been put in place. Binance insists that the Binance Smart Chain is the same public blockchain as any other, such as Ethereum, so the exchange cannot be held accountable for what happens on it.
In the past, Binance has provided assistance to users affected by the actions of fraudsters on the blockchain it launched. So, in November, she was able to track the movement of assets stolen by the DeFi-project Wine Swap, and take control of 99.9% of them. The damage from Wine Swap’s actions was estimated at $ 345,000. The Binance team was able to identify the attacker. By that time, he had brought almost all of the cryptocurrency to stablecoins, ether and Chainlink. Upon receiving a notice from the company, the fraudster agreed to return the assets.
The exchange also states that such investigations require significant human and material resources, and potential success is often undetermined. Wu notes that the situation is different in the blockchain of the Huobi exchange, a significant part of the projects and users of which are located in China, so she is forced to use more centralized control mechanisms.
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