With the growing popularity of Ethereum layer 2 networks, Blast, a recent addition to this ecosystem, has quickly gained attention from not only investors but also scammers. The most notorious incident involved a victim who lost more than $130,000 to a sophisticated phishing scam.
This particular scam was carried out by a fraudster who it happened by Matt Huang, Partner at Paradigm, endorsing phishing links associated with Blast. The first sign of the incident came from Bitrace, which highlighted the significant financial loss. The fraudulent message, posted under an official Blast tweet, has not yet been removed, highlighting the sophistication and danger of these scams.
A victim has submitted a report to us that a fraudster is impersonating @matthuang Promote phishing link blast.invie[.]In the case of io, financial losses worth more than $130,000 have been incurred.
— Bitrace (@Bitrace_team) November 24, 2023
How did Blast form?
Blast, launched on November 20, has demonstrated rapid growth, attracting a total value locked (TVL) of over $375 million in its first week, according to data from DefiLlama. The platform, created by Tieshun Roquerre, introduced an innovative yield generation model for ether and stablecoins. However, the sudden success has also put Blast on the radar of scammers, who seek to exploit less-wary investors for illicit financial gains.
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In addition to phishing risks, Blast faces criticism related to its structure and business model. The main concerns revolve around the current limitation on withdrawals from the platform, which extends until February 24th of next year, raising questions about liquidity and asset control. This restriction has generated distrust regarding the accessibility of users’ funds.
Concerns about Blast’s structure and potential security vulnerabilities
Blast’s reward structure has also come under fire. So early access members can earn additional points based on their activities and the individuals they invite, creating a tiered rewards system. This structure has led some critics to draw parallels with pyramid schemes.
Jarrod Watts, an engineer at Polygon, raised another type of concern about potential vulnerabilities in the Blast platform. He highlighted risks associated with the “enable transition” function and the “mainnetBridge” contract, which could allow unrestricted access to all staked ETH and DAI, posing a significant threat to investors’ assets.
Watts highlighted that Blast currently does not have an operational network for transactions or bridges back to Ethereum. Instead, user deposits are allocated to Lido ETH staking and MakerDAO’s on-chain T-Bill protocol to generate yield.
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