Alarm in Crypto Industry: Nearly ~$3million ICO Token Scammed by the Anonymous Founder in Oyster Pearl
Another scam caught into the shackles of social media channels after an exit taken by the unknown and mysterious founder of the Oyster Pearl “Bruno Block”. The scam happened early on Oct. 29. after deploying the transferDirector function on the Oyster Protocol token contract.
Strangely the CEO, William Cordes along with other developers revealed that they weren’t aware of the true identity and the whereabouts of the founder and chief architect of the project.
This is quite outlandish to understand how a project can run with a shadowy figure and get listed on KuCoin- a leading exchange.
Although the trading of Oyster PRL on Kucoin exchange has been temporarily suspended.
Bruno Block was the only individual who had access to the function, called “transferDirector”, and used his director powers to resume the ICO for Oyster Pearl. Bruno was able to do this since he was the sole owner of the smart contract private key, and this allowed him to mint around 3 million new PRL tokens which he promptly sold through KuCoin Exchange.
The Function protocol allowed the new director to re-open the ICO for PRL and re-issue new tokens (1 ETH = 5000 PRL / .04 per PRL). Bruno then sent these tokens (upwards of 3M PRL) to KuCoin where the tokens were market sold. He extracted ~$300,000 in funds prior to its shut down trading and withdrawals on KuCoin.
Regardless of the approval of the three separate smart contracts in audits, Bruno kept the directorship of the token contract open so that the peg could be adjusted over time. This ultimately turned out to be a trapdoor mechanism in the contract that was eventually exploited illicitly.
Now, here it is becoming interesting to mention that the contract was written by Bruno Block prior to the ICO, at which point Bruno was the only member of the team. The team relied on the auditors involved here for assurance that the smart contract was safe. Bruno was the only one who had the ability to transfer directorship within the PRL smart contract.
After understanding the situation the team is justifying that Bruno Block did this to avoid the detection from KuCoin KYC procedures which will be purportedly implemented on November 1st.
While elucidating on the anxious situation Sidharth Sogani, Founder of CREBACO- The Credit Rating Agency for Exchanges Blockchains and Initial Coin Offeringswhich helps to identify loopholes and weak links, and aid the firms to fill these gaps to make the project more sustainable, questioned that “Why are there so many ICO and token coin scams happening in the crypto world? Have the gullible people and the regulatory authorities ever thought about it? The industry is growing swiftly and scams and hacking are taking place even more precipitously. It is a high time to set up standards for observance and disobedience for cryptocurrencies and ico’s globally.”
Further, he indicated the importance of the management of the company and the audit criteria’s which is the most important and crucial to understanding by the investors to avoid these frets of the volatile industry.
Sogani relayed, “Cryptocurrency has come for the better, safer and more transparent environment not to create panic and distrust. The organizations must follow the all-around process of evaluation to ensure the credibility of the project which includes inter alia, the complete assessment of the management, financials, technology, internal security, legal status, and compliances.”