Web3 Gaming Project reportedly hired actors as executive producers in $1.6M exit scam.
On October 10, the development team for the game project FinSoul committed an exit fraud while raising $1.6 million from investors through market manipulation, according to a recent report shared with Cointelegraph by blockchain security platform CertiK.
The FinSoul team hired paid actors to pretend to be executives, then raised funds for the sole purpose of developing the gaming platform. However, instead of actually creating the platform, the Finsol team transferred Bridged Tether (USDT) $1.6 million from investors to itself. According to blockchain data, developers have cashed in on cryptocurrency mixer Tornado Cash. Interestingly, this was not the first allegation of misconduct against Finsol developers.
On May 23, Decentralized Finance (DFI) Project FinTech published a press release stating that it had “taken advanced technology and gone ‘live' to develop the Finsol US-based Metaverse platform.” The announcement said that the company is using advanced technologies such as “Unreal Engine 5 and Cocos 2D” to develop “sandbox worlds, multiplayer sports, entertainment experiences, player socialization, MMORPG” and other game content.
That same day, on-chain sleuth ZachXBT reported that the first fintech Defi project had committed exit scams. The group apparently stole $31.6 million and attempted to launder the money by linking it to the Tron blockchain, according to ZachXBT.
In response, CertiK said the group “re-branded” in August, changing its name and social channels. “FINTS” became “Standard Cross Financing (SCF)”. CertiK has compiled a picture of what the CEOs of both fintech and Standard Cross Finance look alike.
CertiK claims to have verified the correct names of the people listed as the project's CEO, COO and CFO. According to him, these “executives” are actually actors working in the entertainment industry. CertiK also claims that the project's chief technology officer is listed on an advertising poster for the entertainment company, which provides evidence that he is a paid actor. He was unable to identify the remaining two men who claimed to be “executives”.
The rebranded “Standard Cross Finance” group continues to promote FinSoul on YouTube and Telegram, the report said. The marketing efforts included a video showing the “R&D headquarters”, later revealed to be an office building on East Hamilton Street in Campbell, California. He produced a video of a promotional event that allegedly took place in Vietnam.
While the team page on FinTalk's website names “Bobby Lambert” as the CEO, he is actually a non-existent and paid actor.
In the past, both the Singapore government and Morgan Stanley have issued warnings about this investment plan. pic.twitter.com/SLxvOCPj1s
— ZachXBT (@zachxbt) May 23, 2023
According to blockchain data, the project deployed its token contract to the BNB Smart Chain network on October 10. During the deployment, 100 million FinSoul (FSL) tokens were generated and transferred to the deployer's account. The deployer then sent 3 million FSL to other accounts in multiple transactions, leaving 97 million in his hands. One of the transfers was to an address where he used the tokens to create a liquid pool for FSL on PancakeSwap for 210,000 FSL. Since then, this pool has been used by traders to buy and sell FSL.
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According to data from DEX Screener, the price of FSL first settled at $0.3911 per token on October 10 at 6:30 am UTC. In the next few hours, it rose to $17.5774, then retreated from this high and came to stabilize around $5 in the next few hours. Then, between 4:30 PM and 5:00 PM UTC, the price suddenly fell, dropping from $5 to roughly zero.
The two events occurred between 4:25 and 4:35 pm UTC on October 10, which may explain the sudden price drop. At 4:25 pm, the FSL dealer account transferred the remaining 97 million FSL to another address. At 4:35 p.m., this account sold all 97 million tokens to the liquid pool, moving $1.6 million worth of Binance-pegged USDT from the liquid pool to this account. This sale represents 32.33x the amount of FSL coins previously in circulation. This account then transferred the disbursed funds to Tornado Cash through a series of transactions.
According to CertiK, the Standard Cross Financial Group managed to convince investors to reinvest despite losing money from investors twice. It has now launched FSL with a new token deal. At the time of writing, DEX Screener shows that the new version of FSL is valued at $1.29 per coin.
Cointelegraph contacted Standard Cross Financial's team but did not receive a response by the time of publication.
FinSoul's story serves as a cautionary reminder that crypto investors should research new projects before committing their money. If the Certike report is to be believed, a fraud group has managed to dupe investors not just once but twice and is currently attempting a third scam. Investors should remember to exercise due diligence before investing in projects that do not have a working blockchain project.
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They have created a continuing problem in the decentralized financial world, creating “running gear” or scams. Xirtam, an arbitrage-based protocol, allegedly stole more than $3 million from investors using a token sale over the summer. In this case, Binance was able to freeze the funds and refund users with a modern contract as of September 6.
However, most rogue drag victims are not so lucky. In June, DeFi project Chibi Finance withdrew more than $1 million of its users' funds in a “terror” operation, and these funds have yet to be recovered. In the year In 2021, the Popcorn Swap withdrawal scam cost investors more than $11 million and led to criticism of the BNB Chain development team to this day.
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