How to Identify Crypto Scams with ZachXBT

The crypto space is rife with phishers, scammers, hackers, and pirates. It is a rugged frontier after all and warrants an abundance of caution, no amount is too much. That being said, it is impossible to make worthwhile money by not taking risks.

While it is true that you will learn more by getting rugged, it is also true you’ll learn a substantial amount through on-chain analysis before you dive feet first into a risky position. The golden rule remains: Invest in real companies that create real products and provide real value.

On-chain analysis is a powerful tool for learning about a contract or protocol but has a steep learning curve. Understanding a product and identifying its legitimacy is the most important skill a cryptonaut has. Now lucky for the space, some anons have taken it upon themselves to analyze for the greater good.

The definite lack of investigative journalism in crypto is troubling. There are plenty of bloggers (yo) and technical writers in the crypto space. Still, investigators are rare or their skills are spoken for elsewhere. It’s odd because the blockchain has no secrets, one needs only to look closely at the transaction history to obtain a narrative. This is what @zachxbt does and is the focus of this article on how to identify scams. His assertions leave a mark on the unscrupulous that is not easy to remove.

Blockchain “privacy”

Now before we dig into Zach’s work, we must address the nature of a blockchain. Everyone has heard the meme that crypto is only for money launderers and is not transparent, a nightmare for legislators. But a blockchain by its sterile honesty debunks that nonsense. Understand this, a blockchain is open to everyone and there is no privacy besides the light shroud of your public key. Through transactions, social media, and traditional records of history a keen investigator can reveal the secrets behind a public key. It only requires time.

Investigative work is financially and laboriously expensive and it is a severely underserviced market. You might change that.

Rugpulls

A rug pull is simply an ICO/IDO/NFT where the team has no intention of following through on promises to its holders. Some rugs are instant where the team violently dumps their bags onto their holders with little remorse. Other rugs are slower where a team will string a community along until maximum value has been extracted.

Zach’s body of work identifies NFTs, people, and venture capital companies. His subjects range from anonymous to incredibly rich and famous. It is surprising how many mega stars got their feet wet in dumping on retail investors. Some investigations lead to arrests but some of the bigger fish seem to avoid consequences. As the saying goes: Forget it @zachXBT, it’s the Cryptotown.

How to Avoid NFT scams

Generally, NFTs are a scam and you will lose money if you are not psychotically scanning discord channels and flipping the tokens you purchase quickly.

There are exceptional NFT projects and they have strong teams propped up by a good community. That said, there is money to be made in NFTs, but dishonest projects prey on that hope and are generally successful.

Projects that are derivative, uninspired, or blatant copies should be avoided. The scammer’s goal is to mint their NFTs and skate with the money. Take note of The Bored Ape Yacht Club by Yuga Labs, a real project:

Now take note of the Bored Bunny’s investigation:

1/ Here’s a summary on the NFT slow rug @BoredBunnyNFT & a breakdown where the $21.1m (6339 ETH) actually went as well as their ties to other NFT rugs.

Floyd Mayweather, David Dobrik, DJ Khaled, French Montana, Jake Paul, Chantel Jeffries, & more were paid to promote the project pic.twitter.com/yWQpNMx2ba

— ZachXBT (@zachxbt) March 31, 2022

A team of scammers will generally put effort and time into creating their project, they are a form of business despite the lack of scruples. The website and social media accounts are done just well enough to look legitimate at first glance. But another red flag is greedy mint behavior, this project quickly minted too many Bunnys in too short a time.

It also isn’t cheap buying endorsements and Bored Bunny’s was a fairly sophisticated scam considering big names were promoting it, particularly Floyd Mayweather, a name that will come up a lot in @zachXBT’s work.

When it was clear to the team that maximum value had been extracted, they simply handed the keys over to a moderator of the discord channel and left with the money. But since they were heavily investigated by @zachXBT, they did make a return in hopes of avoiding the Department of Justice’s wrath. Time will tell but the Bunny’s website is currently taken down.

What is a Shitcoin?

A reasonable description of a shitcoin is a token of no value or utility whose sole function is to create exit liquidity for presale holders. All these scams are similar in outcome whether fungible or non. Take the money and run.

We can take note of coins with substance: Bitcoin, a payment network secured by economic incentives. Ethereum or Solana, layer ones that facilitate DeFi and dApps (and shitcoins alike) with famously dedicated teams and communities.

Now take note of Worldcoin:

Let me sum up how bad @worldcoin is

-Distributed “fairly” yet the team gets 20% of the supply and every major VC is invested
-User acquisition model imitates that of a MLM (Herbalife)
-Privacy policy permits them to give your data to 3rd parties
-Name resembles a 2017 ICO scam

— ZachXBT (@zachxbt) October 23, 2021

The idea behind it (besides dumping on rubes) was a sustainable currency for the world’s citizens. Its proof-of-humanity was its security; an orb with a 2000’s aesthetic that would scan the eye of the user in exchange for a small amount of Worldcoin. That was the idea behind their ‘fair launch’ but the team and VC roster had 20% of the supply. On top of that, the data was to be given to third-party participants, the true proof of humanity.

Many shitcoins are being created in perpetuity but Worldcoin is one of the funnier ones. It’s a brazen multi-level marketing scheme with, again, big names attached to it:

Here’s @worldcoin at it with the MLM ponzi business model (think Herbalife or Northwestern Mutual) https://t.co/uTHrklObbZ pic.twitter.com/V9olABEvAr

— ZachXBT (@zachxbt) October 24, 2021

Is Vaporware the Same as a Shitcoin?

It is to your benefit that you make the distinction between vaporware and a shitcoin. Though they are similar they do function differently in the pursuit of sucking value from gullible investors. Vaporware projects claim to be developing a product, it exists but ultimately it provides little to no value to the underserviced market it alleges to be supplying. If the solution doesn’t require a token, why invest?

Launchpad projects are easily identifiable vaporware but were quite popular, even with important projects I like such as THORchain (RUNE/USDT) and the Thorstarter token. Be warned:

1/ Now that we have had a few green weeks and with Solana Summer happening you can guess who is making a return.@solstarterorg

If you remember correctly they delayed the IDO due to “unfavorable market conditions” after raising a bunch of money from VCs pic.twitter.com/iVBxW4JpZk

— ZachXBT (@zachxbt) August 18, 2021

The Power of Stardom

With an unregulated industry such as crypto, scammers can make a career and operate unmolested for as long as the market can bear them and even past that. This industry is complex and requires constant research to establish a proper footing in the space. There are rules to this game and guiding voices to be heard, but they are hidden in a sea of influencers looking to cash in on their follower’s ignorance. A strong and principled follow list is crucial to the curious investor.

The path to wealth is a siren’s song but can be avoided. There are a few categories of scum we can learn to avoid:

Shills

In my opinion, Youtube is one of the worst sources of crypto information. The platform only incentivizes ad revenue through unnecessarily long and vapid videos designed to keep eyes glued to them. People like Bitboy lay claim to expertise and a portfolio guided by such and they want to share it with you, for free. Do not be fooled by the production value.

In reality, they’re social media influencers. They make their money from endorsement deals, ad revenue, and merchandise. Dumping on retailers is just an added weapon to the charlatan’s arsenal:

1/ Let’s review all the direct scams Bitboy has worked with in the past. Just in case you forgot here is the flyer with how much he charges.

I received this a while back by posing as a project interested in a promotion.
🧵 👇 pic.twitter.com/FkC9HUDGsc

— ZachXBT (@zachxbt) January 3, 2022

If you do like someone on Youtube, do your research on that person. Look at the past projects they talked about. Research those projects. Find the dead bodies along the way. You’ll find most of crypto Youtube is paved in blood.

Signaling Groups

Rather than listening to a talking head, a lot of new users prefer taking an active role in a community in their pursuit of riches. Just like the beguiling blanket of surety from the talking heads, other people inspire confidence in users by walking amongst them.

These are signal groups, communities whose sole function is to provide buy/sell signals to members. Some legitimate groups provide analysis where the labor and spoils are split among the members. By their exclusive nature, they are hard to locate and join. If it was easy, everyone would do it.

Be judicious with your loyalty, as some benevolent leaders don’t stick around for the rally and in most cases are the harbingers of the dump:

1/ Let’s review all the direct scams Bitboy has worked with in the past. Just in case you forgot here is the flyer with how much he charges.

I received this a while back by posing as a project interested in a promotion.
🧵 👇 pic.twitter.com/FkC9HUDGsc

— ZachXBT (@zachxbt) January 3, 2022

1/ Welcome to Shill Team 6: Scott Melker

First let’s kick it off with ScottMelker.eth

Pay close attention to the registrant address. pic.twitter.com/X2VNdokwDP

— ZachXBT (@zachxbt) May 27, 2021

Celebrity Endorsements

Celebrities will also be employed to shill garbage, I give them the benefit of the doubt since it is almost guaranteed they know less than you about crypto and treat endorsements as they would any other product. But some names appear more often than others, and this cannot be by mistake:

1/ Well it appears @FloydMayweather has lied to followers once again. His new project @Mayweverse managed to only bring in $193.5k but the anon team has vanished since minting concluded & proceeds have been transferred away.

Funny enough there are direct ties to THREE rug pulls https://t.co/HKj9r2QR9w pic.twitter.com/ggn1WlBwnc

— ZachXBT (@zachxbt) May 5, 2022

Notable Investigations from ZachXBT

Sifu, Dani, and Wonderland:

Here’s some more CT shillers you can watch out for.

And no I do not want to know wtf webfour is… pic.twitter.com/NF7PTxbm7R

— ZachXBT (@zachxbt) January 10, 2022

Moonrock Capital:

1/ Welcome to the bull run of 2020/2021. It’s up only (was), valuations are at ATH, and your favorite influencer can be a VC.

New funds pop up on a weekly basis yet at the same time invest/incubate a billion projects at once. How are they so efficient you might ask?

👇👇👇

— ZachXBT (@zachxbt) June 30, 2021

1/ Someone who worked very closely with the Moonrock team sent these over from their DM’s with Simon. https://t.co/FSgPjaHycJ pic.twitter.com/F3o00pPTiO

— ZachXBT (@zachxbt) July 7, 2021

Stop Buying Vaporware