While Web3 brings wealth opportunities, it also comes with certain risks and even some man-made traps. Recently, the "private equity financing scam" incident spread on the X platform has attracted widespread attention.
Most of the private financing rounds of Web3 do not have relevant legal effect. They are basically trust-based financing behaviors, and investment traps and frauds are frequent. Fraudsters often disguise themselves as community members with rich project resources, build their own identities through packaging, and win the trust of victims to commit fraud.
Unlike previous cases, this time the victims include some senior practitioners in the crypto industry, including KOLs. Odaily Planet Daily found that the total amount involved in the case has reached 4.22 million yuan (according to the rights protection group), and most of the victims are investors in mainland China, with a scale of more than 50 people.
Through this report, we hope that investors can be more vigilant and avoid being harmed by such scams. The following is the course of events, with the relevant content explained by the victim.
A scam that lasted for more than a year, with nearly 6 related projects
Back in May 2022, when new public chains such as Aptos and Sui began to emerge, mainland investors looked for relevant Chinese communities on Discord and Telegram, hoping to find like-minded community friends to explore early opportunities of new public chains together.
The scammers posted node tutorials for the new public chain on Twitter and Youtube to attract users to join the Discord and Telegram groups they created.
After that, the scammer often distributed benefits and held activities in the community, creating the image of an official community builder of the project in the community. He was deeply trusted by community members, and according to relevant group chats, one could also feel the respect of community members for him.
In August of the same year, the scammers began to say in the community that they could help everyone obtain the amount of Aptos private round of token financing. According to the victim’s description, the scammers revealed that the information about the amount of private round financing came from the institution they were working with, Alameda.
From August to December 2022, the scammers kept chatting privately with people in the community, asking whether they would participate in Aptos' private round of financing. Due to the scammers' performance in the previous few months, most community members were convinced of their identities and did not become suspicious. They thanked the scammers for giving them the opportunity to participate in the private round; even though no private round agreement was signed, no one in the community raised any objections.
Since most projects have a lock-up period for their private rounds of financing, the scammers also used this method and claimed that the lock-up period was 1 year. Since Aptos's token APT was launched in October 2022, the scammers said that the private placement unlocking time node was November 12, 2023. This series of operations is more in line with Web3 practices, further dispelling investors' suspicions.
After the private placement, the scammers often held community activities. For example, the first community AMA event claimed to be Sui's official was held in its Sui Chinese community, and suspected Sui official personnel participated at the time. According to the victim, the number of community members was close to 8,000 at its peak.
This person has been active in the community for nearly a year, and he has released his dynamics from time to time, such as joining the APTOS Foundation and becoming a member of the foundation; he also revealed screenshots of chats with Sui's official staff, showing the close relationship between the two; and later revealed that he had joined the core team of the Linera public chain. The following is a screenshot of this person's proof information.
During this period, the scammer frequently updated information about related projects, and community members also felt that the information descriptions were relatively true. At the same time, he often went to Taiwan, Singapore, Hong Kong and other regions to participate in activities and package his identity.
When the dream is awakened, the private equity scam is exposed
But the beautiful dream will eventually be shattered. On November 12, the unlocking time of the private placement round arrived.
At this time, the scammer had not yet shown his "fangs" and still explained to the community members that the official did not want to unlock all of them at once, but after his unremitting efforts, he finally distributed them to everyone on November 17. The whole behavior seemed very sincere, just like the incarnation of an actor.
This person then suggested testing the wallet addresses that everyone had reported before, transferring 0.1APT to each deceived person to check whether the account was available.
On the morning of November 17, the victims discovered that all the social groups related to the scammers had been disbanded, all social media accounts had been cancelled, all related traces had been cleaned up very thoroughly, and the previously promised private placement token unlocking had not been fulfilled.
It was only then that the victims woke up from their dreams and realized that they had been deceived. The angry victims began to post on social media and spent a lot of money to find information about the scammers, but they got little. More victims began to gather together and actively discuss countermeasures to try to make up for their losses.
Stories of private placement fraud are not uncommon, but there is always a question in everyone's mind: Why do scammers continue to disguise their identities for a year after they succeed? Is it possible that the information about the private placement rounds of related projects is all true, and the scam is not disbanded until the unlocked tokens are transferred to the scammers' own accounts?
According to the victims’ own accounts, the scammers continued to use similar methods to privately chat with other social media users throughout the year; in addition to the Aptos private placement financing, projects such as Sui, Linera, ZKS and Starknet were all labeled as private placements to commit fraud.
Regarding the recovery of victims’ assets, Ms. Xiao Sa, director of the China Banking Law Research Association, told Odaily Planet Daily: “There is no signed agreement, only WeChat chat records and on-chain token transfer records, which means that even if the case goes to court, investors may face the risk of failing to provide evidence. In addition, the investment target is virtual currency, and its “transfer” is carried out through the wallet address. Although the record is recorded on the Internet, the query channel needs to be conducted on major currency websites. Therefore, when investors present transaction records to judicial authorities, the evidentiary effect of the website query results may be insufficient compared to bank transfer records, and it is highly likely that they will not meet the proof standards of various lawsuits; secondly, the real-name information of the wallet address cannot be directly reflected in the query results, and it will be difficult to prove that the recipient is the counterparty of the communication.”
I would like to remind everyone not to easily believe in the fundraising information of projects that even large institutions cannot get rounds of funding, and not to easily believe in the investment promises of strangers. Be vigilant and avoid being deceived.
