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Coinbase’s Layer 2 Base is a Scammers Playground

Last Updated August 17, 2023 4:19 PM
Omar Elorfaly
Last Updated August 17, 2023 4:19 PM

Key Takeaways

  • Reports show that there have been over 500 scams on the Base blockchain since its launch days ago
  • Scammers made more than $2 million in profits
  • Coinbase launches a countermeasure to fight off scammers

Since its launch on August 9, Coinbase’s BASE blockchain has experienced numerous scams. Scammers have been seen creating scam tokens and advertising tokens that capitalize on similarly-named legit tokens.

The crypto-monitoring company based in New York, Solidus Labs, reports  that BASE has become a hub for scam tokens that gathered over $2 million in profits.

Scam Tokens

Solidus Labs found that more than 500 scam tokens used names that would attract users by stealing the credibility of legitimate tokens and blockchains. The crypto-monitoring firm investigated  coins such as BASEPEPE (BPEPE) and Baby Yoda (YODA), tokens created solely for an eventual rug pull.

The investigations included findings of over 300 tokens that let their creators mint an unlimited number of coins, a feature Base users weren’t aware of, which obviously heavily impacted the respective tokens’ values. 

Further, 60 tokens did not allow holders to resell their tokens.

According to Solidus, these tokens resulted in about $3.7 million in trading volume on Base-based decentralized exchanges, which earned the scammers over $2 million in profits.

Moreover, BALD, a token created to mock Coinbase CEO Brian Armstrong’s appearance, saw its creator turn $500 to a million in a few mere hours, ending his journey with a rug pull.

Hacks

On August 14th, RocketSwap Labs, one of Coinbase’s new Layer-2, BASE projects, reported an incident of brute force hacking where $865,000 or 471 Ether from the protocol.

The incident was first reported  by PeckShield, a blockchain security company.

As a result, RocketSwap decided to shut down the operations on BASE, in an attempt to limit the harm done.

Coinbase told CCN that “given the permissionless and open nature of Base, we expect to see various types of projects built on the network. We encourage consumers to do their research diligently before participating in any dapp, on Base or any other chain, just as they would on the open internet.”

The security flaw in BASE led many stakeholders to second-guess participating on the blockchain.

Leading Base blockchain decentralized exchange LeetSwap shut down trading on the blockchain, citing  “We noticed that some pool liquidity might have been compromised and we temporarily stopped the trading to investigate.”

Coinbase’s Pessimism

Reacting to the damage done on BASE, Coinbase says it will launch an open-source monitoring tool called Pessimism. Coinbase told CCN that Pessimism is designed to swiftly identify anomalies within the protocol and network, thereby fortifying the system’s security. Additionally, the company is actively engaged in creating tools aimed at enabling developers to enhance their confidence in the security of the smart contracts they deploy.

The spokesperson said that the company believes customers should have access to information, tools, and expertise so they can make informed decisions before sending or signing any kind of transaction.

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