On October 10, the development team of gaming project FinSoul carried out an alleged exit scam, siphoning off $1.6 million from investors through market manipulation, according to a recent report from the security platform CertiK blockchain shared with Cointelegraph.
The FinSoul team allegedly hired paid actors to pose as their executives and then raised funds for the sole purpose of developing a gaming platform. However, instead of actually creating the platform, the FinSoul team allegedly transferred $1.6 million in bridged Tether (USDT) from investors to itself. Blockchain data indicates that the developers then laundered the funds through cryptocurrency mixer Tornado Cash. Surprisingly, this was not the first accusation of misconduct against FinSoul developers.
On May 23, the decentralized finance (DeFi) project Fintoch technology-develop-232000070.html” target=”_blank” rel=”noopener nofollow”>published a press release stating that it had adopted “advanced technology to develop the US-based FinSoul metaverse platform.” and that it had been put “into operation.” The announcement said the company was using “advanced technologies such as Unreal Engine 5 and Cocos 2D” to develop “sandbox worlds, multiplayer sports, entertainment experiences, player socialization, MMORPGs” and other types of gaming content.
On the same day, chain detective ZachXBT reported that the original Fintoch DeFi project had performed an exit scam. The team had apparently stolen $31.6 million and connected it to the Tron blockchain in an attempt to launder the funds, ZachXBT claimed.
In response, CertiK claims that the team “rebranded” in August, changing its name and social channels. “Fintoch” became “Standard Cross Finance (SCF)”. CertiK produced an image showing key executives at Fintoch and Standard Cross Finance, who appear to be identical.
CertiK claims to have verified the real names of the people listed as the project’s CEO, COO, and CFO. According to him, these “executives” are actually actors who work in the entertainment industry. Additionally, CertiK claims that the project’s CTO was featured on a promotional poster for an entertainment company, providing evidence that he is also a paid actor. He was unable to determine the identities of the other two people who were supposedly “executives.”
The renamed “Standard Cross Finance” team continued to promote FinSoul on YouTube and Telegram, according to the report. Their marketing efforts included a video showing a supposed “R&D headquarters,” which was later revealed to be an office building on East Hamilton Avenue in Campbell, California. He also produced a video of an alleged promotional event in Vietnam.
The team’s page on Fintoch’s website names “Bobby Lambert” as CEO when in fact he does not exist and is a paid actor.
Previously, both the Singapore Government and Morgan Stanley issued warnings about this investment plan. pic.twitter.com/SLxvOCPj1s
– ZachXBT (@zachxbt) May 23, 2023
According to blockchain data, the project deployed its token contract to the BNB Smart Chain network on October 10. At the time of implementation, 100 million FinSoul Tokens (FSL) were minted and transferred to the implementer’s account. The implementer then sent 3 million FSL to other accounts through multiple transactions, leaving 97 million remaining in their possession. One of the transfers was for 210,000 FSL to a ADDRESS who later used the tokens to create a liquidity pool for FSL on PancakeSwap. From then on, traders used this pool to buy and sell FSL.
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DEX Screener data shows that the price of FSL was initially set at $0.3911 per token on October 10 at 6:30 am UTC. Over the next few hours, it rose to $17.5774, then retreated from this high and eventually stabilized around $5 over the next few hours. Then between 4:30 pm and 5:00 pm UTC, the price suddenly collapsedfalling from about $5 to almost zero.
The two events appear to have occurred between 4:25 pm and 4:35 pm UTC on October 10, which may explain the sudden drop in prices. At 4:25 pm, the FSL implementer’s account transferred the remaining 97 million FSL to another ADDRESS. At 4:35 pm, this account sold the 97 million tokens to the liquidity pool, moving USDT worth $1.6 million linked to Binance from the liquidity pool to this account. This sale represented 32.33 times the number of FSL coins previously in circulation. This account later transferred the funds drained to Tornado Cash through a series of transactions.
According to CertiK, the Standard Cross Finance team managed to convince investors to invest in their project again, despite having funds taken away from them twice. Now FSL has relaunched with a new token contract. At the time of writing, DEX Screener sample that the new version of FSL is valued at $1.29 per coin.
Cointelegraph reached out to the Standard Cross Finance team but did not receive a response at the time of publication.
FinSoul’s story serves as a reminder that cryptocurrency investors should research new projects before committing funds to them. If CertiK’s report is to be believed, it implies that a scam team was able to fool investors not just once, but twice, and is currently attempting a third scam. Investors should remember to exercise due diligence before investing in projects that do not have a functioning blockchain project.
Related: Pond0x DEX Claims $100 Million in Trading Volume as Critics Allege It’s a Scam
“Rug pulls,” or exit scams, have posed an ongoing problem in the world of decentralized finance. The Arbitrum-based Xirtam protocol allegedly stole more than $3 million from investors through a token sale over the summer. In this case, Binance managed to freeze the funds and return them to users via a smart contract starting September 6.
However, most pull victims are not so lucky. In June, DeFi project Chibi Finance wiped over $1 million of its users’ funds through a “panic” feature, and these funds have yet to be recovered. In 2021, the PopcornSwap exit scam resulted in losses of over $11 million for investors and led to criticism of the BNB Chain development team that still continues to this day.
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