Fraud is a sad but inevitable part of the cryptosphere. Cases of exit scams, in particular, have been surging in recent years. The latest case of a suspected scam involves a crypto wallet associated with EOS.

EOS-based wallet application, EOS Ecology, has reportedly made away with millions of users’ funds after it shut down with customers’ funds still locked in it.

On Monday (April 20, 2020) users of EOS Ecology learned that they could not log in to their accounts and access their crypto. These investors feared that this could be an exit scam orchestrated by the creators of the crypto wallet app.

Like many other Ponzi schemes, EOS Ecology attracted investors with promises of high yields on their investments. The wallet application also posed as a node of Starteos (one of EOS’s block producers) to gain customers’ trust. In other words, EOS Ecology led investors into believing that it had close ties with a legitimate project that is well-known in the EOS ecosystem.

In fact, the wallet application distributed some returns to users in its early days in an attempt to entice more customers before finally shutting down and freezing withdraws. 

Yesterday, clients complained that they were unable to withdraw their funds through the EOS-based wallet application. At the time, EOS Ecology held approximately 19,366,587 EOS coins owned by its clients. While users were unable to access their EOS, massive fund transfers occurred indicating that an exit scam was underway.

According to sources, the stolen EOS tokens made their way to accounts related to the Huobi exchange, as suggested by the names given to these accounts. All the accounts bear the name huobidevice, followed by a number from 1 to 5: huobidevice1, huobidevice2, huobidevice3, huobidevice4, and huobidevice5. 

The crooks have defrauded investors out of over $51 million in EOS, as is evidenced by the total amount of funds held in these accounts. Notably, a huge chunk of the embezzled funds was transferred to huobidevice3 and huobidevice5.

However, Huobi exchange stressed that these two addresses are not in any way affiliated with the exchange. The crypto exchange also said that it is closely monitoring the EOS Ecology project and all relevant inflow addresses have been blacklisted by the system. 

In the past, scams like the famous Chinese PlusToken scheme have been accused of negatively affecting the bitcoin price after the scammers cashed out via exchanges.

Similarly, the EOS Ecology exit scam could exert significant selling pressure on the EOS market should the fraudsters decide to dump the filched tokens on an exchange.

EOS is changing hands at $2.53 at the time of publication, with 5.32 percent losses on a 24-hour adjusted timeframe. The crypto-asset is ninth-ranked with a market capitalization of $2,330,646,402.

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