Blast Platform Used by Fraudsters to Launch Projects: Report

According to on-chain detective ZachXBT, a notorious group previously involved in blockchain frauds across various platforms is now initiating new projects on the Blast platform. The group, which has orchestrated multi-million dollar scams on platforms such as Magnate, Kokomo, and Lendora, has recently transferred approximately $1 million in laundered funds to an address on Blast to fund new fraudulent activities. 

Community Alert: The group of scammers who stole 8 figs with Magnate, Kokomo, Lendora, Solfire, etc is back with a new project on Blast @Leaperfinance

Last week they funded an address on Blast with ~$1M of laundered funds from the previous rugs and have begun adding liquidity… pic.twitter.com/yqRKvZuuye

— ZachXBT (@zachxbt) April 14, 2024

Tracking the Transfer of Laundered Funds

The process of transferring these funds has been meticulously tracked by researchers. Initially, the funds were moved from an Ethereum address linked to previous scams to another address on the Polygon network. 

Afterward, assets were converted to Wrapped ETH (wETH) and transferred through multiple blockchain networks using various bridging services such as Orbiter and Bungee but in the end, were utilized on the Blast platform to buy LEAP tokens, and thus, pumping liquidity on what looks to be another trap for victims. 

Concurrently, according to ZachXBT, the same culprits are likely behind another currently active project named ZebraLending on the Base platform, which has a live TVL of approximately $311K. 

History of Deceptive Operations

This group has been known to have a long list of projects that had been able to gather a lot of Total Value Locked (TVL) figures but just leave with the funds. Methods used usually comprise the development of fake Know Your Customer (KYC) documents and cooperation with lower-level auditing firms to create a semblance of legality. Among the platforms targeted by this bundle are Base, Solana, Scroll,Optimism, Arbitrum, Ethereum and Avalanche, which shows their operational agility and wide spread in the blockchain space.

The recurring character of such scams shows the necessity of the vigilance within the community of blockchain. Increased vigilance is recommended to the investors especially with the lately introduced projects on the platform like Blast and where significant flow of funds is involved.

Checking the project credentials, overview of audit reports and knowledge of money transactions’ channels are necessary actions that users can make to save their investments. In addition, community members are invited to share information and help each other in detecting suspicious activities to avoid another victimization.

Protective Measures and Investor Safety

Consequent to these fraudulent activities, the demand for increased security measures on platforms that utilize block chain, is increasing. Adoption of strict KYC processes and getting audits by some renowned firms are some actions aimed at protecting investor interests. Moreover, platforms should strengthen their transaction monitoring systems to identify and eliminate the sophisticated fund movements associated with laundering operations.

The persistent appearance of such fraudulent schemes as those found on the Blast platform testified to the necessity of long-term strategies in the blockchain security. Investor-focused education programs, best practice sharing, and the promotion of transparency across platforms can have significant positive impact in reducing the risk. In addition, teamwork among the blockchain analysts, the security professionals, and the platform developers will be crucial in developing stronger defenses against fraud.

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