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Sneaky New Scam Robs Crypto Startups Of $300k+ Using Bitcoin

Small crypto startups are being duped for hundreds of thousands of dollars worth of Bitcoin by figures posing as VCs. Victims reportedly include RematicEGC (RMTX), Taboo token (TABOO), and InstantXRP (INSTANT XRP) – all of which recently suffered massive price dumps.

Rematic Gets Robbed

Mike Pazuki – CEO of RMTX – recently spoke with CryptoAdventure to share details regarding the scam. He recalled being contacted by two individuals through LinkedIn that claimed to be investors. They both expressed initial interest in the project and called back later with a $500k investment offer.

“We conducted research on these two individuals, and all appeared to check out,” said Pazuki. He was able to identify an investment/property company the scammers allegedly represented, as well as a land address.

Pazuki concluded that his team only needed a $300k investment to fund development for his intended application. The scammers agreed and arranged a trade of $300k in Bitcoin for a dollar equivalent number of RMTX tokens at current market value. This came out to 7.18 Bitcoin for 23,166,023,166,023 RMTX.

At the scammer’s request, Pazuki agreed to create an Exodus wallet for conducting the Bitcoin transaction. Then, during a live zoom call, each initiated an initial test transfer of $1000 in Bitcoin for 77.3 billion RMTX. Once confirmed by both parties, Pazuki received a “visual receipt” upon transfer of the remaining 7.12 Bitcoin. He then transferred the owed 19.9 trillion RMTX to the thieves’ wallets.

However, after transferring the tokens, Pazuki quickly noticed that the latter 7.12 Bitcoin transaction was “removed” and reversed. The scammers then abandoned the call, making off with both their initial Bitcoin holdings and stolen RMTX tokens.

The CEO admits to having unconsciously “rushed” to secure funds to cover future expenses for his project:

“This was an unnecessary risk and I have no intention of making any excuses for it,” he said. “I should have been much more calculated in my approach to secure these funds. This is a mistake that will not be repeated.”

The RMTX team has documented the identities of the scammers and has already filed a complaint with the FBI.

How Was This Possible?

Bitcoin transactions are renowned for being irreversible, unlike banking transactions, often seized upon by ransomware scammers demanding crypto. However, this scam appears to have taken advantage of precisely the opposite – a subtle transaction reversal mechanism.

No record of the second transaction exists, suggesting the blockchain never confirmed it. Furthermore, Exodus is a non-custodial wallet, meaning a third party could not have returned the funds.

Therefore, it’s possible that the scammers provided a receipt of a low-fee transaction before it was settled on the blockchain. They then may have rendered the transaction invalid by substituting it with a self-transfer that used the same funds. If it gave the latter transaction a higher fee, miners would have processed it faster, disallowing the first transaction.

Bitcoin Core developer Peter Todd recommends that six blocks confirm transactions before considering them “settled”.

Token Dump

Pazuki noticed that it liquidated the RMTX tokens he transferred immediately after the scammers received them. This caused a massive price crash for RMTX last Friday – which it thankfully recovered from shortly after.

RMTX / USD. Source: CoinGecko

However, the CEO reported that two prior victims – TABOO and INSTANTXRP – also suffered a dump. Unlike RMTX, they did not see a price recovery.

TABOO / BNB. Source: TradingView
Bitcoin live price
price change

One of the most notorious crypto scams occurred in October when a token based on the hit Netflix series “Squid Game” stole millions in holder’s funds. It prevented them from withdrawing and selling their tickets, making for an easy rug pull by the founders.

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