CoinMarketCap accused of fraud

By  Roman Batekha 409 19 Jan 2023
Photo - CoinMarketCap accused of fraud

CoinMarketCap was accused of fraud with airdrops. A large volume of tokens was allocated to just a few wallets, which is suspicious.

Two cryptocurrency projects have reported cheating due to promotional airdrops conducted by CoinMarketCap (CMC) on their behalf. According to them, the tokens were "gamed" for the benefit of a small group of people.

CoinMarketCap sometimes hosts airdrops from various crypto projects. The main goal is to attract an audience to their social networks and increase interest in their project. But this story ended with the tokens reaching only a few wallets, indicating potential manipulation.

SATT token

An advertising airdrop for the SaTT crypto project was held in December 2022. It was assumed that 25,000 winning wallets would receive 4,000 SATT tokens each, which at that time was $6.3. But later, SaTT reported that 84% of the tokens allocated for the airdrop were received by only 21 wallets.

Shortly after the airdrop was sent out to 20,953 winning wallets, the tokens were automatically transferred to 21 wallets, which sold out the tokens after a few days, raising about $142,000.
As a result of the sale, the price of SATT has dropped by 70% since the end of the airdrop.

SaTT claims wallet 0x929... (pictured) has over 4,500 transactions with their token. Blockchain data shows that the wallet has sold over 4.3 million tokens through PancakeSwap.

SaTT claims wallet 0x929... (pictured) has over 4,500 transactions with their token. Blockchain data shows that the wallet has sold over 4.3 million tokens through PancakeSwap.

Also, this wallet conducted transactions with another token that airdropped on CMC. But this situation has gone unnoticed so far.

Also, this wallet conducted transactions with another token that airdropped on CMC. But this situation has gone unnoticed so far.

TokenBot token

TokenBot co-founder Sean Newsom had a similar experience when the company airdropped its TKB token with CoinMarketCup on December 9th.

Sean Newsom said that CMC provided them with 30,000 winners, but he decided not to send tokens to all the wallets at once but to do it in several steps. As if he felt that something could happen and sent only part of the tokens.
As a result, TokenBot only sent out its tokens to the first 4,000 winners, but about 3,300 of them ended up sending funds to a single wallet, Newsom said.

The bscscan data shows that thousands of TKB transactions go to wallet 0x5AF... before it initiates a cross-chain exchange and then sells its assets.

The bscscan data shows that thousands of TKB transactions go to wallet 0x5AF... before it initiates a cross-chain exchange and then sells its assets.

"Obviously someone figured out how to 'play' in CMC," he said. "If we had to send bulk, the whole airdrop would have been a complete disaster."

Sean Newsom also said that he has since received an apology from CMC, saying they would investigate the mailing and update the list of winners.

In its investigation, SaTT claims to have uncovered 18 additional airdrops conducted by CMC since July 2022 that were also allegedly "scammed" in the amount of $6.6 million.

SaTT theoretically considers two options for how the fraud occurred:
"Either a group of hackers injected multiple fake accounts [into the airdrop on CMC’s website] […] Or was it really an inside job."

CoinMarketCap reply

The representative noted that only three projects, SaTT, AgeOfGods, and TokenBot, spoke with the CMC team about their concerns. They did not receive any notifications from other projects.

However, the spokesman acknowledged that "bots are an issue that touches almost every industry."

"The industry has been facing this issue between airdrop programs for some time and the reality is that no industry has been able to completely solve the bot issue."
"We are constantly working to improve our systems and services to limit this issue and will work closely with these projects to find solutions and help resolve any existing issues," a team spokeswoman added.