ZachXBT Warns New Token Project Links To Known NFT Scammers

Key Insights:

• ZachXBT warned that the Web3 token project was linked to team members behind the 2022 Squiggles NFT scam.
• Web3 employed a controversial deposit-for-airdrop strategy that gained notoriety after the Book of Meme episode in 2024.
• Squiggles NFT was exposed as a $20 Million scam. Utilizing shadow wallets to inflate trading volume in the lead-up to its launch.

Blockchain investigator ZachXBT issued a community alert after discovering that a new project called Web3 was connected to alleged scammers. They were tied through previous rug pull operations that had drained millions from unsuspecting investors.

The warning came after Web3 announced a token airdrop on Aug. 27 via X. Using a deposit strategy that required users to send SOL tokens to receive airdrops back to their wallets.

ZachXBT replied the following day with a direct warning. He stated that Web3 was linked to a team member of the Squiggles NFT rug and Raichu. These were individuals he had previously exposed for fraudulent activities across multiple crypto projects.

Notorious Deposit Strategy

The Web3 project announced its presale with a pattern that became infamous in crypto circles during 2024. Users send SOL to an address and wait to gain an equivalent amount in tokens.

This deposit-for-airdrop strategy gained notoriety in 2024 with the release of the Book of Meme (BOME) episode.

BOME launched in March 2024 and employed this approach to create a decentralized storage system for memes on the blockchain. Thus offering early investors returns of up to 20 times their investment within weeks.

However, the strategy was increasingly exploited by scammers. Scammers usually collected funds without delivering promised tokens or delivered worthless tokens after taking users’ money.

The mechanism became particularly dangerous because it appeared legitimate. While providing an easy way to drain user wallets under the guise of airdrops.

ZachXBT’s warning referenced the Squiggles NFT project, which YouTuber Coffeezilla exposed as an alleged scam in February 2022.

The project had generated massive attention, with over 230,000 X followers. It was positioned to raise approximately $20 Million through its NFT drop, scheduled for February 10.

Hours before the anticipated launch, an anonymous user published a detailed 60-page dossier that alleged Squiggles’ founders were paid puppets working for serial NFT scammers.

The document meticulously documented how the real operators belonged to a group of fraudsters operating under the umbrella name “NFT Factory LA.”

Coffeezilla’s investigation contained on-chain data revealing that Squiggles used a series of shadow wallets to artificially inflate trading activity and create the illusion of legitimate demand.

A single account created hundreds of wallets and moved around $7 Million worth of Squiggles by purchasing NFTs and reselling them on OpenSea for less than the purchase price.

The episode was orchestrated by three individuals known as Gavin, Gabe, and Ali, who had previously executed multiple NFT rug pulls, including League of Sacred Devils, League of Divine Beings, Vault of Gems, Sinful Souls, and Dirty Dogs.

The shadow wallets bought exactly three Squiggles each, attempting to generate hype and interest before immediately trying to flip them to unsuspecting buyers on the secondary market.

Celebrity-Backed Crypto/NFT Projects Facilitator Joins

ZachXBT also pointed to the involvement of a person identified as Raichu.

The blockchain investigator published a report in April 2023, revealing that Raichu, identified as Ryan, claimed to have helped sell over $15 Million worth of projects through marketing and celebrity promotions.

However, ZachXBT shared information pointing out that many of these projects were outright rug pulls or pump-and-dump schemes.

Raichu’s promotional network systematically connected various celebrities and influencers with alleged scams.

He collaborated with rapper Lil Xan to promote Baller Ape Club, which ultimately became a $2.6 Million scam resulting in wire fraud and international money laundering charges by the US Department of Justice in June 2022.

He also connected celebrities with Crazy Lemur Club, which rug-pulled with $320,000 shortly after launch.

The founder was later exposed for being behind over $5 Million in additional phishing scams targeting crypto users.

Additional projects facilitated by Raichu included Ancient Cats Club, which stole over $1.7 Million after involving Rich The Kid, and Vault of Gems, promoted by Antonio Brown before the team disappeared with over $1 Million.

ZachXBT documented over 50 examples of scams or pump-and-dump schemes that Raichu helped promote through celebrity endorsements, with many influencers failing to disclose the promotional nature of their involvement in these fraudulent projects.

The deposit-for-airdrop mechanism became increasingly exploited during last year’s memecoin frenzy.

Malicious actors reportedly stole 655,000 SOL tokens, valued at $141.3 Million as of press time, through 27 fraudulent memecoin presales on Solana.

Some scammers even hacked verified social media accounts, including hardware wallet provider Trezor’s X account, to promote fraudulent presales and collect SOL from unsuspecting individuals.

As a result of this backdrop, ZachXBT advised community members to steer clear of the Web3 project.