Coinbase Internal Blockchain Launch Followed by Impersonation Tokens

Coinbase launched its own Layer-2 blockchain yesterday, built in collaboration with Optimism on its OP stack.

The new Layer-2 blockchain, called Base, will host many of Coinbase’s on-chain products and offer low-cost EVMs to developers.

Piggybacking on recent news

Unfortunately, opportunistic bad actors are once again trying to make a quick buck off the success of other companies. Not even a day after the launch of Base, Solidus Labs announced via its Token Sniffer website that at least four new tokens had been identified, all with names echoed in Coinbase’s new product, such as Base Token and even the very generic name “Coin Chain. ”

🚨SCAM ALERT: Since @coinbaselaunch of testnet @BuildOnBasefour representation tokens were created to capitalize on the hype around the Layer 2 network.

Token details: pic.twitter.com/LnQJfMCoZw

— TokenSniffer.com (@Token_Sniffer) February 23, 2023

These tokens try to give an air of legitimacy, hoping to entice gullible users to buy their tokens before they realize they have nothing to do with Coinbase. Unfortunately, there is an even bigger problem 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 creator of the contract to withdraw funds as soon as they are deposited into the wallet, which means that even if a user realizes that he has been tricked, he will not be able to do much about it. respect .

One of these tokens, BASE, rose by 250%, according to Coinmarketcap, reaching a price of $7.05 – bringing the coin’s market capitalization to approximately $1 million – before dropping to around $2 by the time this article was written.

Furthermore, Coinbase has stated that it has no intention of releasing any tokens affiliated with this new blockchain – so any further tokens of this type could be dismissed as an outright scam.

Market immaturity

Unfortunately, new tokens trying 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 Vertex Protocol DEX, users who buy these tokens are misled by the name or are simply falling for the scam.

“Coins being minted on the grounds that they look like a substantial project but are just riding on a news cycle is a sign of persistent immaturity in digital assets. Whoever buys them is either making a mistake with a protocol that does something else entirely, or is just falling into deliberate fraud.”

Scams like the infamous Squid Game Token are the most brazen, but more recent examples of AI-centric tokens trying to capitalize on the recent surge in interest in AI also come to mind. These problems are further exacerbated by bots buying new tokens on the spot, as demonstrated by the notorious prankster Avraham Eisenberg.