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False PEPE, JASMY, SUSHI and API3 Withdrawals Generate Misleading On-Chain Signals: Here’s How to Spot Fake Crypto Transactions

Rene Peters Rene Peters
October 1, 2023
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Scammers have been conducting fraudulent withdrawals from cryptocurrency exchanges to wallets linked to decentralized finance (DeFi) projects, generating false signals of developer activity.

Small Fake Transactions Exploit Blockchain Transparency

According to analytics firm Spot On Chain, over the past few days Binance has seen fake withdrawals totaling $193 in value sent to addresses associated with DWF Lab, a DeFi project building on Polkadot.

The fraudulent transactions involved 121 million $PEPE ($100 value), 49 $API3 ($52), 65.47 $SUSHI ($39), and 583 $JASMY ($2). DWF Lab head @ag_dwf has confirmed these transactions were not legitimate and did not originate from the project’s team.

While the amounts are small, these fake withdrawals can create misleading impressions of developer engagement and project health. They exploit the transparency of blockchains to trick market participants scanning on-chain data.

How to Avoid Being Misled

Experts recommend taking precautions to avoid being misled by this scam activity:

  • Use on-chain analytics platforms like Spot On Chain to filter out low-value “spam” transactions. Their platform has a feature for this purpose.
  • Set up customized alerts for specific project entities you are monitoring. Advanced platforms like Spot On Chain use AI to automatically filter out suspicious transactions in alerts.
  • As always, conduct due diligence beyond just on-chain signals to assess project legitimacy and development activity.

By being aware of these fraudulent tactics and using the right tools, crypto investors can avoid false signals when analyzing blockchain data. Responsible platforms are deploying AI and other advanced methods to maintain data integrity for their users.

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Rene Peters
Rene Peters

Rene Peters is editor-in-chief of CaptainAltcoin and is responsible for editorial planning and business development. After his training as an accountant, he studied diplomacy and economics and held various positions in one of the management consultancies and in couple of digital marketing agencies. He is particularly interested in the long-term implications of blockchain technology for politics, society and the economy.

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