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Bitcoin Fund Manager Scam: A Case Study in Detecting Fraudulent Bitcoin Transactions
Introduction: This case study revolves around an investor well-versed in real estate, stocks, and cryptocurrency. The investor, identified here as 'Client R', discovered our services via a Google search for crypto professionals and reached out with an unusual problem via our contact form, stating:
"Can you help navigate a Coinbase Wallet with BNB wrapped BTC run on ETH to unlock so I can gain access? It says I need BNB to pay fees but it's also not supported but I'm sure there is a way around it."
Problem: On July 22nd, 2023, Client R had invested $14,000 in a trading fund named Bitcoin Fund Manager, discovered through YouTube. Within two days, the client was informed that his investment had surged over 1500%. Excited by the apparent returns, the client requested a withdrawal of 1.7 BTC back to his Coinbase Wallet. However, he was unable to access these funds.
Approach: In order to diagnose the issue, we initiated a thorough examination of Client R's wallet on Etherscan and BSCScan to locate the wrapped BTC. The tokens were located on the BNB Chain. We delved deeper into understanding the nature of the BTC contract address via BSCScan, scrutinizing its inception date, transaction volume, and the total minted amount. This is the BTC contract address we located on BNB Chain:
https://bscscan.com/token/0xbe63ac9aacc3a6e785ec5723fa9f191544691bb6
Findings: The investigation revealed alarming details. We discovered that the BTC contract in question was minted less than 24 hours prior to our investigation, which raised the first major red flag. Secondly, the contract stated that 100,000,000 BTC were minted, an absurdly high number given the maximum limit of 21,000,000 genuine Bitcoin. Finally, there were only eight holders of this token, with only eight total transactions recorded. These findings indicated the BTC held in Client R's wallet was, in fact, fake.
Solution: Unfortunately, in this case, the solution was not a happy one. Our investigation confirmed that the client was the victim of a scam and had lost his initial investment. We informed the client about the findings, ensuring we explained the details of our investigation, and how we arrived at our conclusion.
Conclusion: This case study illustrates the importance of caution when dealing with third parties in the digital asset space. Unfortunately, our client fell victim to a scam, serving as a sobering reminder of the risks present. As crypto professionals, we're dedicated to guiding investors through these complexities, providing clear advice and trustworthy services to help avoid such situations.