Fraud by false representation of 4JNET, people lost more than $100,000

Emerging blockchain startup, 4JNET has spoken against the group of fraudsters who disguised themselves as the protocol’s developers to defraud community members. As contained in a statement shared with Coingape, the yet-to-be-identified fraudsters created a fake digital token of the 4JNET protocol which was sold to community members, raking in a total of US$100,000.

The cyberattack and deliberate attempt to defraud the 4JNET community occurred on the 25th of November and spanned about an hour. The fake token created was sold via PancakeSwap through which the hackers burned the LP to gain an unfair advantage. According to the details shared, the fraudster then shared his personal address to targeted 4JNET members on Telegram, some of whom unknowingly funded the account.

Upon learning of the coordinated scam, the 4JNET team is requesting the blockchain community and vested stakeholders including trading platforms to help in freezing and refunding funds through the BSCscan in order to minimize investor losses.

“The 4JNET team will do everything possible to avoid the recurrence of this incident, and reiterate that the 4JNET team will not ask investors to pay in their own name. I hereby warn you that all the information is based on the official website and official telegram. The group shall prevail,” a 4JNET Spokesperson said in the shared statement.

Growing Attack in the DeFi World

The attack on 4JNET is not uncommon as cybercriminals are ever-evolving in their approaches to unduly rake in funds they do not work for. While project rug pulls have remained a common occurrence, specific targets of unsuspecting users through fake token offerings on social media particularly Telegrams have soared in recent months.

More sophisticated attacks have been recorded in the broader decentralized finance (DeFi) ecosystem in the past year. One of the most publicized as reported by Coingape is the Poly Network hack which saw more than $600 million in funds pulled from the interoperable blockchain protocol.  While the Poly Network hacking eventually turned into the protocol’s favors as active correspondences and appeal convinced the hacker to return all of the stolen funds, other protocols have not been so lucky.

In October, DeFi lending protocol, Cream Finance suffered a flash loan attack with about $100 million pulled out from the protocol’s vault. Others include but are not limited to Vee Finance which lost more than $35 million in Bitcoin (BTC) and Ethereum (ETH).

This series of attacks have made critics question the security claims of DeFi protocols. This is an outlook that developers, including those of the 4JNET team, are tasked to change as the broader DeFi ecosystem journeys into its mainstream adoption phase.