Alleged $20M NFT Drop Scam Busted by Blockchain Community

14 March 14:09

[TL;DR]

Popular YouTuber, Coffeezilla, has busted a $20M NFT drop scam. The influencer revealed the fraud in a recent YouTube video.

They planned to use an NFT project called Squiggles, for which they had generated a lot of hype. However, some hours before the launch of Squiggles, a dossier was dropped, indicting the whole team behind the project. According to the dossier, the team behind Squiggles is a group of individuals responsible for several scams, and the face of the Squiggles project was only a figurehead. These scammers are known as NFT Factory based on revelations from Coffeezilla. Since the discovery, the NFT drop scam project has been delisted by OpenSea. The shadow wallets used to push a false narrative about it were also exposed and delisted by OpenSea.

Fill in the form to receive 5 reward points→

Story Behind Squiggles

On the 10th of February, Squiggles, a new NFT project, started minting. According to the developers, it is a collection of 10,000 NFT pieces. Before the collection's launch, the project attracted a lot of hype, with the team spending quite a lot on publicity, including on electronic billboards, influencers, and others. Its Twitter handle currently has about 223k followers after hitting 230k followers just before the big reveal indicating the volume of publicity done.

However, a few hours before the project's launch, the face behind the project, known as Arsalan, was seen in incriminating videos that would start the project's downfall. According to Coffeezilla, Arsalan was seen in the same car with another alleged NFT scammer Gavin. Gavin Mayo, the founder of the NFT rug-pull Sinful Souls, had been on a blacklist in the NFT community.

Sinful Souls Homepage

After linking a chain of related events and further investigations, Coffeezilla makes a complete video that provides sufficient incriminating evidence for Opensea to pull the rug on the project. Part of the investigation includes monitoring the Etherscan accounts that participate in the preliminary rounds of the project.

Barely thirty minutes into the project's launch, about $7 million worth of Squiggles had been bought. Upon further scrutiny, it was learned that shadow wallets created by one account had spent about 500 ETH on the project. Another account was discovered to have used shadow wallets to purchase 800 ETH. Both accounts bought Squiggles and tried to sell the NFT pieces for lesser prices on OpenSea. According to Coffeezilla, this action was part of the sensationalism and hype generated around the Squiggles collection. Selling the NFT pieces for lesser on Opensea aimed to portray an illusion that the collection was high in demand and fast selling. However, before they could go far with the project, the Squiggles collection was delisted on OpenSea alongside the shadow wallets.

Squiggles Still Fighting Back

In the light of damning evidence, people expected that the team would take down the project. However, a few hours to the project's launch, Arsalan was quoted in an Instagram post saying.

"I woke up to some crazy fud about me, some weird accusations, not sure where they come from or how I'm tied exactly. I would never hurt anyone physically, financially, or mentally; it's not in me; I'm all about my morals."

In a bid to justify his actions on the night before the launch, Arsalan went further to say

"People are just trying to paint a picture that's not true, and they're trying to ferment (foment) fear. I was in the club with friends of friends who didn't have a good reputation in the space. Now they're trying to tie me to them; it's not how it works, guys; please do not jump to conclusions."

Arsalan is still holding meetings with Squiggles holders and whitelist members despite all that had gone down. The team behind the project has also tried to kickstart a social media campaign with the hashtag #freesquiggles to cause Opensea to list the project back. The project is presently listed on Looksrare, and currently, over 2700 pieces in the collection are on sale. In a press release on Twitter, they announced that they were cutting down the pieces in the collection to 5000 pieces.

Twitter Press Release

The Team Behind Squiggles Is Accused of Running Other Scams

The troubles for Squiggles started when a 60+ pages dossier was released some hours before the project's launch. The document alleged that Arsalan was just a paid frontman for the NFT rug pull, which Squiggles was. According to the dossier, there was a team of NFT scammers behind the project, and this group of scammers was also responsible for other NFT rug pull scams.

In Coffeezilla's video, three individuals (name withheld) are identified as the team behind League of Sacred Devils, League of Divine Beings, Vault of Gems, Sinful Souls, Dirty Dogs, Lucky Buddhas, Uncovered, Faceless, among others. According to him, these individuals had perfected creating NFT scams by churning out NFT projects that look quality but are only a facade. They run the scam by pushing different faces to be the frontman for each NFT project. However, the same individuals were behind all the operations.

Two racket members, Gavin Mayo and Travis Skiver admitted to being behind Sinful Souls in one video. However, Travis Skiver, the face behind Faceless, denied ever being part of Sinful Souls. Faceless NFT, which was generating quite a buzz, was busted by the YouTuber NFT WatchDog as a collection of stolen digital artworks.

In a series of leaked DMs, the scammers are seen discussing whose identity will be the frontman for a new project. According to one of the messages, Gabe, a member of the ring, is "obviously Centurion"; however, from the Faceless website, Travis is doxed as "centurion." After selling about 2,700 pieces of the fake NFT Sinful Souls reportedly made close to $500,000 before going offline. Investigations show how organized the group was in their efforts. For example, there was an exhibition for Sinful Souls in a Los Angeles location to claim legitimacy, and many people fell victims. According to Gavin, the level of the organization went as far as opening up a physical office, one of the ringleaders, "so no loose ends."

The scammers were due to make about $20M from the NFT drop scam Squiggles before they were exposed. Fortunately, their actions led to their exposure before thousands of people fell victim to their gimmicks.

Author: Gate.io Observer: M. Olatunji
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.