MonitorChain recently uncovered a potential scam in the cryptocurrency industry which could be enabling fraudsters to make millions of dollars at the expense of investors. The scam could be an exit strategy which is driving the price of the underlying security to nearly nothing. The scam is emerging in RusGas, a project that claims to “transform the gas industry” using blockchain.
A $2.2 Million ICO Leads to Issues
RusGas raised $2.2 million during its ICO, as noted by ICO Bench. However, MonitorChain is now suggesting that the project could be duping investors. On November 28. MonitorChain detected suspicious token minting activity for RusGas.
During its ICO, the company had a token supply of 10 billion. However, last month end, they minted another 100 billion tokens. This diluted the existing supply, and the tokens were sent to Crex24, a Russian exchange. These tokens were then sold. The little-known token became the highest volume grossing token on the exchange the very same day.
Token minting has sped up since then, and 850 billion new RGS tokens were created, which increased the total supply by 86 times the original supply. All these tokens were also pushed to Crex24. The exchange currently has 220 billion in sell orders. The price of the token has now been driven to nearly nothing – as the prices have been diluted down to the minimum possible, one-billionth of a Bitcoin.
MonitorChain recently said that they have received a reply from the Crex24 team on the incident. The exchange said:
“Our current policy is to act according to coin/token dev requests. As they have their own (and, we hope, the best) vision of coin/token promotion/development.”
The exchange will not disable trading in the token despite the ongoing allegations. MonitorChain wrote in a blog post:
“Crex24 will not disable trading despite being fully aware of the situation. It is now our opinion that Crex24 are knowingly profiting from fraud and are complicit in this scam.”