Coinbase records 500 scam tokens on its newly introduced, Base blockchain

On Base, the new blockchain introduced by cryptocurrency exchange Coinbase, developers are said to have deployed more than 500 fraud tokens, a regrettable side effect of how open these networks are to use, which makes them vulnerable. 

More than 500 scam tokens, including BASEPEPE (BPEPE) and Baby Yoda (YODA), were deployed by developers between mid-July and Base's release to the general public in August 2023, claims Solidus Labs, a New York-based startup that specialises in keeping track of suspicious cryptocurrency transactions. 

A company spokesperson said: “We encourage consumers to do their research diligently before participating in any dapp [decentralised application], on Base or any other chain, just as they would on the open internet.”

What does the Solidus report claim? 

As per the information, almost 300 of these tokens offered their creators to mint unlimited coins, without the knowledge of Base users, hence affecting the value of tokens.. Solidus claimed that another 60 coins prevented purchasers from reselling them on exchanges. 

Coinbase created Base to support a developer ecosystem that would create decentralised apps for Coinbase users, enhancing the use and appeal of the exchange. The development of decentralised apps that link to Coinbase's services, users, and tools is made easier by Base, one of the Layer 2 networks created on top of Ethereum.   

According to the research, on Base-based decentralised exchanges, where users can trade directly with one another, these scam tokens achieved a trading volume of around $3.7 million. Other cryptocurrencies, in addition to the scam coins, have been falsely promoted and exchanged on Base.

Crypto scams are on the rise 

Decentralised money may make it easier to spot fraudulent tokens than traditional finance, but the hype that Base has created has attracted crooks, the research claims. Creators of scam tokens profit from excitement, promises, and volume and price manipulation. 

The information further stated that token scams are a common problem across all open blockchains, therefore this problem is not specific to Base. In fact, the blockchain data company Chainalysis discovered that pump-and-dump scheme features were present in 24 percent of all new tokens introduced in 2022.