The AsiaCoin scam shocked the altcoin community. It turns out the scam was not particularly sophisticated, but resulted in a devastating financial loss for many altcoin market participants. AsiaCoin had been a market darling and trading volume leader since its inception. Now it’s been delisted from all major exchanges and the cryptocurrency is now essentially worthless.
How Did The Scam Unfold?
The AsiaCoin scam could have been detected by anyone from the very first moment the coin launched. Hidden in the source code was a pre-mine that paid the Developer of the coin an extra 360,000,000 coins times 10. All he did was alter the code in order to hide the total number of coins.
It’s now thought that most likely he simply hacked the coin daemon code in several places to cover up a pre-mine that already occurred. BitCoinTalk member micyron did a forensic code audit and found the areas of interest, which he outlined in this post.
The code snippets have also been posted on Github. Even non-coders can likely recognize that only a few small changes were made which covered up a rather large scam. Don’t forget one of the biggest selling points of AsiaCoin (of which there were essentially none) was that this altcoin did not have a pre-mine! That’s generally a sign of an honest Dev who wouldn’t cheat community members. In this case it was just the opposite. Many of the people who turned Bitcoin into AsiaCoin did so by buying it directly from the Developer and his hidden stash!
No one one knows exactly how much he earned, but several cursory investigations suggest numbers as high as $140,000. If true, that’s a pretty impressive payday. Given that altcoin scammers are likely career criminals who specialize in this type of crime, many in the altcoin world are beginning to realize this scammer will either come back soon or hasn’t even left.
The Culture Of Rushing Caused This Massive Flop
In the altcoin launch arena, everything is done in a huge rush. People are in such a huge hurry to ‘get rich‘ with a new altcoin that they literally barely scratch the surface of a coin’s existence. They never look under the hood or take the coin for a test drive. They take the words of unknown Developers at face value.
Since they’re competing with a bunch of other people who are also in a rush to get paid, very little checking or double-checking is ever done.
Under the darkness of this cover, criminals are now taking huge liberties with the source code. DaFuqcoin was the first-ever trojan launch of an altcoin. That coin code unlaunched the Azazel rootkit, which allowed the Dev/Attacker to gain control of servers. He looted wallets and caused the collapse of at least 5 altcoin service providers.
Despite that, nothing - or very little - was learned by an industry that seems to have more than its fair share of incompetent people running crucial services.
Giving Trust Where No Trust Is Earned Backfired
In the ‘real world‘ people don’t put trust into people or entities lightly. In the world of altcoins, trust is automatically granted to anyone who posts an ANN thread.
As the U.S.S.R taught the U.S.A, people should ‘trust, but verify.’ It’s okay to give some amount of trust to a new altcoin, but there’s no reason to turn off all common sense and go balls deep. Instead, use your head and start analyzing launches. Ask questions! Demand answers! Most of the scam Devs are poor at communications. They will have NO way to answer hard questions.
People have to wake up and realize real money is at stake. This type of scam is going to happen again and again. Trust, but verify.
The Bagholders Refuse To Believe In Reality Or To Take A Loss
People have been warning AsiaCoin holders for days that there was something fishy about their beloved investment. They were dismissed with the typical ‘pump and dump‘ blow-off about spreading ‘FUD.’ Indeed, Fear, uncertainty, and doubt is exactly what these bagholders should have had. Instead they were captured in the throes of irrational exuberance. All they could muster were ‘to da moons‘ and pictures of Warren Buffett to bolster their weak arguments.
They pointed to the rising prices as the only indicator that AsiaCoin was a smart investment.
Other than being caught in an elaborate Pump and Dump scam, these investors had no reason to keep pushing the price of AsiaCoin higher. The coin had NO MERIT. The Dev is a criminal and the code contained a special surprise. Yet countless people acted in concert to fleece others out of their BTC by insisting the cryptocurrency was the second coming of Bitcoin.
Now these same bagholders are making a list (which makes them easy targets for more scams) and desperately trying to find a way to weasel out of the mess they find themselves in. What they should do, is take their losses and learn their lesson. You were scammed. Instead, they want to create a new coin and sell it to others to make themselves whole again. That really shows a sad, non at all empathetic mentality for these so-called victims. When the scammed become scammers, the altcoin industry is hitting new, all-time lows.
Don’t get me wrong, I have sympathy for anyone who has lost money here. Still, two wrongs don’t make a right.
Update: A Cryptsy staff member said due to the sneaky nature of the attack, it’s likely a second version or AC2 will not be welcome at that exchange.
In Altcoins No One Is Responsible For Anything
Altcoins are a world where everything is presented ‘as is.’ Absolutely NOBODY is responsible for anything that happens. If you lose your money on an exchange, it’s your fault. If your coins are lost on a mining pool, that’s tough. Every once in awhile an honest operator will go above and beyond the call of duty and help someone out, but it’s not common practice.
The exchanges don’t care about the coins. They accept ANYTHING. They just want trading volume so they can earn fees and they don’t care where it comes from. MintPal and Cryptsy, in particular, are two exchanges that promote new pump and dump coins almost exclusively. Poloniex has also (in between getting hacked) gotten in the habit of encouraging P and D’s as their main source of revenue.
None of these exchanges give a damn about their customers or the altcoin industry. If they can earn a fee, they’ll put any altcoin up on their exchange. Unfortunately for them, this policy is going to cost them TONS of money.
Exchanges Are The Target
The late, great bank robber Willie Sutton responded when asked why he robbed banks, “that’s where the money is.” The same holds true for altcoin exchanges. Their wallets are the fattest, so they are very obvious targets for the organized criminals who are now systematically stealing from the industry.
Since they don’t check code before putting it on their exchanges, and they HAVE NO REQUIREMENTS for a listing, I can only imagine what’s going to happen when the scammers increase their talent levels and load the code with even more goodies. With the kind of money the scam Devs have been making lately, they can up their game and start launching much more sophisticated attacks.
Altcoins Still Rock
Despite all this drama, alternative cryptocurrencies are a thriving segment which will only get bigger and more vibrant. Support the coins that have demonstrated they are committed to long-term success. Avoid scammy launches and start thinking in terms of months and years and not days and hours. If the average person starts to do this, the scammers won’t be able to win. If everyone keeps on rushing to name a new Pump and Dump King, more and more losses will occur.
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