Imposter Tokens Using PYUSD Pop up on Several Blockchains

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PayPal just launched its stablecoin Paypal USD (PYUSD), and the opportunistic crypto industry has already hopped on the trend, creating and spreading fake tokens with a similar ticker. Over 60 new token pairs have surfaced on several crypto networks with the intention of unsuspecting users.

Crypto Impersonators Strike PYUSD

This influx follows an announcement by the New York-based payments behemoth on Monday that its PayPal USD (PYUSD) stablecoin will soon be accessible to consumers. This makes PayPal the first significant financial institution to launch a native stablecoin.

Today, we’re unveiling a new stablecoin, PayPal USD (PYUSD). It’s designed for payments and is backed by highly liquid and secure assets. Starting today and rolling out in the next few weeks, you’ll be able to buy, sell, hold and transfer PYUSD. Learn more https://t.co/53RRBhmNHx pic.twitter.com/53ur2KmjU7

— PayPal (@PayPal) August 7, 2023

While the tokens are yet to be released, some con artists are already attempting to snare unwary users. So far, the strategy has been to create a token called “PYUSD,” boost liquidity by using ether or another token, and then make it available to users on a decentralized exchange (DEX).

As of Tuesday at 12:00 pm EST, decentralized exchange scanner DEXTools data reveals that over 66 fraudulent coins were being hosted on networks like Ethereum, BNB Chain, Base, and others. However, many of these fake tokens were listed on Ethereum, which is set to host the original PayPal USD token (PYUSD).

#PayPal's introduction of the novel stablecoin $PYUSD has led to fake tokens appearing on decentralized exchanges like #Uniswap due to the absence of an official token address release. pic.twitter.com/hVj0kpeWbB

— SumsyNews (@SumsyNews) August 7, 2023

While one might wonder how so many people can capitalize and defraud users using this method, it is actually easier than it seems. Based on how Web3 and blockchain networks operate, anybody can create a smart contract on Ethereum or other blockchains for a few pennies.

Additionally, because DEXes exist, tokens can be created much faster, given liquidity, and exchanged immediately.

It is highly improbable that tokens listed with the same ticker on UniSwap or any other decentralized exchange are genuine. This is because PayPal made it clear that PayPal USD may only be traded between verified PayPal and other compatible wallets.

Fraudulent Tactics

Regardless, these imposters have already managed to deceive customers and have rallied quite a bit since launching their fake PayPal stablecoins. The biggest fake PYUSD token, created on Ethereum, saw a startling $2.6 million in trading activity in just over a day of operation.

Many of the bogus PYUSD tokens described are probably “honeypots,” which means that once an investor buys the token, they cannot sell it and have essentially given away their cryptocurrency.

https://twitter.com/capu_puu8/status/1688830047900372992?s=20

Unfortunately, unless they can audit smart contracts themselves, investors frequently won’t become aware that the token is a honeypot until they try to sell their holdings.

To help the tokens take off, the developers buy some of them with their money, creating an illusion of a trendy token with tangible demand and activity. Such developers might make a few thousand dollars in a few hours from the hustle before the token is discovered. This makes it a successful but short-term venture.

Instead of waiting to be discovered, certain developers might remove all liquidity from the phony tokens hours after release in what is termed a “rug pull.” This results in a 100% price decrease and leaves investors owning nothing but digital dust.

As investors and customers wait to release the original PayPal token, the company revealed that the actual PayPal USD ERC-20 contract address can be verified via Etherscan. The token itself was created on November 8, 2022.

Once launched, the tokens will be used for goods and services on the PayPal payment platform. Users will also be able to transfer PYUSD between PayPal and supported external digital wallets or convert other supported cryptocurrencies of PayPal into and out of PYUSD.

It is yet to be determined whether the tokens will be released to third-party exchanges such as Binance, but until then, users ought to beware of scammers.

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