How to spot phony PayPal Stablecoin tokens saturating the cryptocurrency market
Barely 24 hours after PayPal revealed its entry into the stablecoin arena, the Ethereum network is witnessing an influx of bogus operators attempting to capitalize on the buzz.
The digital payments and fintech giant officially introduced its Ethereum-based stablecoin, USD (PYUSD), yesterday. PYUSD, an ERC-20 token, will maintain a fixed 1:1 value with the US dollar. It will serve as a conduit between traditional currencies and web3, facilitating the exchange of the platform's digital assets with PYUSD.
While the token is still pending full release, scammers are already scheming to deceive unsuspecting users. Their tactic involves creating a token named "PYUSD," supplying it with Ether or another token's liquidity, and offering it on decentralized exchanges like Uniswap. This deceptive activity is feasible because anyone can create tokens on Ethereum (or other blockchains) by deploying smart contracts with minimal expense. Moreover, decentralized exchanges enable immediate token creation, liquidity provision, and trading.
To identify counterfeit PayPal Stablecoin tokens flooding the crypto market, watch out for tokens that are mainly purchased by their creators post-launch. This artificially inflates their apparent popularity while trapping investors in a "honeypot," where the token cannot be sold or converted. In some cases, developers may go a step further by withdrawing all liquidity from fake tokens shortly after issuance, causing their value to plummet by 100%, resulting in losses for buyers.
DEXTools data shows over 66 counterfeit tokens on Ethereum, BNB Chain, and Base, with Ethereum being the most prominent. A PYUSD token minted on Ethereum amassed $2.6 million in trading volume, but its value dropped 66%.
Another token named "PepeYieldUnibotSatoshiDoge" gained over 3,000% in value within four hours. This surge in fake PayPal tokens is partly due to PayPal and Paxos failing to provide the official token address for PYUSD in their respective announcements.
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