Scam or misstep? Crypto influencer Jaypeg under fire as $20M fraud case breaks

As crypto adoption surges, so too do scams, with influencers and fraudsters alike exploiting the space. The latest controversy? Crypto personality Jaypeg faces accusations of a rug pull, while a major $20 million scam lands an Indian citizen behind bars.

Per Cointelegraph, the team behind the Uptober memecoin brought forth these allegations, claiming that Jaypeg received tokens for project promotion, sold the assets for profit, and denied receiving funds. 

The story starts with a supposed collaboration between the two. Initially, the Uptober team contacted Jaypeg for a partnership to promote their token. In exchange, Jaypeg was to receive 2% of the token supply—equivalent to roughly $2,200. 

Media outlet Cryptopolitan reported that the influencer said yes to the offer via Telegram and received the payment. However, things went awry when Jaypeg denied receipt of the funds.

According to the Uptober team, Jaypeg got the funds but then deleted the address relayed via Telegram without knowing that they could restore deleted messages.

The influencer later claimed that the address sent was just a random one with which he didn't have any links. Jaypeg also argued that the memecoin team tried blackmailing him and claimed that the screenshots of messages were photoshopped.

The Uptober team reached out to crypto sleuth ZackXBT to delve deeper into the matter. The blockchain detective explained that the Uptober team followed up with the crypto influencer several times, but he “shifted the blame to them and did not resolve the mistake”. 

Per ZackxBT, Jaypeg also claimed to “never sell for $2,200 and made a $2,000 charity donation as proof.” 

1/ A short story about how the influencer @0xjaypeg got caught lying to the community three times this weekend about an allocation for a project all for $2.2K. pic.twitter.com/Nvb5ZqsaXN

— ZachXBT (@zachxbt) October 20, 2024

The crypto influencer later apologized on X, explaining that he “didn't think it would spiral as far as it did, panicked, and called it photoshop”, ending the post with “apologies for hurting everyone's trust here”. 

The on-chain investigator later found that the receiving address of the Uptober tokens—which began with "8jkp1p"—was actually the same one that received airdrops from the Solana Saga smartphone last January, as reported by Cointelegraph. This was just hours after a Solana Saga unboxing video was released by the influencer. 

The Uptober team later revealed on X that Jaypeg reached out to Zalinski, Uptober's lead, and sent 2300 USDC to their community wallet couponer.sol. The team converted the funds to sol and burned them.

Firstly, thank you @zachxbt for speaking truth in calling out bad actors, without which the saga with Jaypeg would have been unresolved.@0xjaypeg has contacted @zalinski_eth and sent 2300 USDC to our community wallet, ctouptober.sol.

Along with the $2k donation to charity and… pic.twitter.com/ILjYjIbbRQ

— Uptober CTO (@CTOUptober) October 20, 2024

While Jaypeg's controversy shocked memecoin circles, another scam—much larger in scale—reminds the community just how far fraudsters will go.

Unlike Jaypeg's alleged $2,200 promotional scam, this one started in 2021 and involved a hefty $20 million fraud, resulting in a five-year prison sentence.

Indian citizen Chirag Tomar was behind the scam, which involved a spoof Coinbase Pro website designed to resemble the real one. While Coinbase's real Pro version can be accessed through pro.coinbase.com, the fraudsters reportedly used CoinbasePro.com, according to Watcher Guru.

Ultimately, the fraudulent website stole the login credentials and authentication data of its users. In some instances, users were even channeled to sham customer representatives who convinced them to allow remote access to their computers.

As a result, victims lost assets stored in their Coinbase accounts, with one individual losing more than $240,000 as a result.

In total, the fraudsters made up to $20 million, and—according to the Department of Justice—this was used to fund their lavish lifestyle, including pricey watches, luxury vehicles, and international trips.

Eventually, the spoof website was shut down, and its functions were later integrated into the primary Coinbase site. 

Tomar was arrested in December 2023, just as he entered the US. He has now been sentenced to spend five years in prison followed by two years of supervised release. 

U.S. COURT SENTENCES COINBASE SPOOFER TO FIVE YEARS FOR $20M FRAUD SCHEME

A U.S. judge sentenced Chirag Tomar to five years in prison for operating a fake Coinbase Pro website, stealing over $20 million from global victims.

Tomar and his co-conspirators manipulated users into… pic.twitter.com/ehZh98MmiO

— IBC Group Official (@ibcgroupio) October 18, 2024

Jaypeg's $2,200 scandal is just the tip of the iceberg. According to the FBI's latest Cryptocurrency Fraud Report, scams like these contributed to $5.6 billion in losses in 2023 alone, with influencer schemes and fake websites preying on retail investors’ fear of missing out.

Investment frauds took the top spot among the many types of crypto scams. According to the report, this was the highest loss garnered from any kind of crypto crime, accounting for $4 billion or nearly 71% of all crypto-related losses.

Call center frauds made up roughly 10% of crypto-related losses. These included government impersonation frauds and customer or tech support frauds. 

The FBI explained in its report that “over the years, cryptocurrency's widespread promotion as an investment vehicle, combined with a mindset associated with the ‘fear of missing out,’ has led to opportunities for criminals to target consumers and retail investors”. 

As the allure of crypto continues to attract both investors and bad actors, the community must stay vigilant, demanding transparency and accountability from even the most trusted voices in the space.