Coinbase‘s new Layer-2 blockchain network Base has been flooded with fraudulent tokens due to security vulnerabilities in the network. According to the data announced this morning, developers have used more than 500 fraud tokens on the Base network from mid-July, when the network was launched, until August 9th.
According to Solidus Labs, a New York-based company that tracks fake crypto transactions, tokens such as BASEPEPE (BPEPE) and Baby Yoda (YODA) have affected the value in the market by allowing creators to mint an infinite number of coins. Base users who are not familiar with this feature of the blockchain network were deceived by this fraudulent method, which did not even allow them to resell at least 60 tokens to investors. Furthermore, some of these tokens contained 70 smart contracts with hidden transaction fee modifiers.
According to reports, fraudulent tokens collected $3.7 million from transactions on exchanges supporting the Base network. In addition, scammers made $2 million in profits from $2.7 million worth of purchases, $700,000 worth of sales, and $300,000 worth of rug sales. The crypto security firm also issued the following warning:
“Fraudulent token creators thrive on promises, price manipulation, and volume manipulation for investors. The fraud surrounding the Base network is no exception. Therefore, approach tokens traded on the Base network with caution.”
Blockchain data analysis company Chainalysis argued that public blockchain networks are often victims of token fraud. Their study revealed that 24% of the 40,521 tokens introduced last year participated in significant pump and dump activities. Furthermore, a single suspicious content creator initially released 264 fraudulent tokens, which were quite active.
Despite the increasing number of fraud tokens, Base has formed major partnerships, including Coca-Cola’s first NFT collection. The collection, released on August 13th with the Onchain Summer event, features Edvard Munch’s “The Scream” and Johannes Vermeer’s “Girl with a Pearl Earring,” among others.