Crypto Projects Defrauded during Airdrop on CoinMarketCap

Paigambar Mohan Raj
Source: Moralis Academy

Two crypto projects were allegedly defrauded while performing an airdrop conducted by CoinMarketCap. The two projects are accusing the firm of being rigged for the benefit of a few protocols. These promotional airdrops were intended to send tokens to thousands of wallets to spread awareness of the project. However, the coins ended up in just a few wallets. The development raised questions about possible system manipulation.

What were these Crypto Projects?

The two projects that claim to have been cheated are SaTT and TokenBot.

SaTT is a Blockchain advertising solution. 84% of the tokens went to 21 wallets, the project mentioned. Initially, 25,000 winning wallets had to receive 4000 SATT each. SaTT claims that soon after the airdrop, 20,953 wallets transferred the tokens to 21 wallets. These 21 wallets sold off the crypto and gained $142,000 in profit. The sale led to a plunge in SaTT’s price by an eye-watering 70%.

Another 18 tokens or nonfungible tokens (NFTs) airdrops carried out by CMC since July 2022, according to SaTT, were reportedly “infected by fraud” for $6.6 million.

Shaun Newsum, the co-founder of TokenBot, related a similar incident. A 30,000 airdrop winner list was provided by CMC, according to Newsum. But Newsum decided to “stagger” the airdrop “just in case something occurs”.

TokenBot first distributed its crypto tokens to 4,000 winners, but 3,300 of them ended up sending the money to a single wallet, according to Newsum. The firm lost around $20,000 due to the incident and had to deploy liquidity from its treasury. Newsum said that “obviously” somebody figured out a way to “game” CMC.

CoinMarketCap responds

Some of the accusations were addressed by a CMC spokesman. According to the representative, at least four of the initiatives mentioned by SaTT have not yet given out awards. This implies that they could not possibly have encountered malevolent behavior. The individual further stated that apart from three projects—SaTT, AgeOfGods, and TokenBot—speaking with the CMC team about their troubles, it has not heard from any additional projects regarding the reported problems.

However, the individual admitted that bots are a problem that affects practically every business.

The CMC spokesperson stated that it works on addressing each issue individually and takes any reports of bot participation in its airdrops “very seriously”.

It also stated a number of mechanisms it has used to prevent participation from bots, including a CAPTCHA test and email confirmation requirements for users. Additionally, a two-factor authentication integration is being developed.