Scammers Target Tokens in Solana Wallets

Scammers have reportedly found a novel way to rug-pull Solana users' crypto assets—this time, by burning users' tokens within seconds of their purchase.

According to Slorg, a member of the Solana-based Jupiter's Core Working Group, scammers are exploiting an in-built Solana token extension to covertly delete their targets' crypto holdings.

Other users have also reported being affected by a similar scam.

Scammers Use the Permanent Delegate Token Extension to Scam a User

In a recent X (formerly Twitter) post, Slorg revealed how scammers are exploiting the "Permanent Delegate" extension in Solana's Token 2022 standard.

While this feature is intended for legitimate functions like token recovery and automated payments, it can also be misused to swiftly burn tokens.

The Permanent Delegate extension grants unrestricted delegate privileges over all Token Accounts associated with a particular mint, allowing for unbounded token burning or transferring.

Solana's website describes its intended uses, including the retrieval of mistakenly transferred tokens and compliance-related applications.

However, Solana acknowledges that it is a "double-edged sword" with potential for abuse.

Slorg shared an incident where a user who swapped for a token named "RED" saw their tokens disappear just seven seconds later.

This misuse of the extension enables scammers to remove tokens from circulation, potentially disrupting markets or manipulating token prices, causing significant financial losses for unsuspecting users.

The Scammers' Motives for Burning the Tokens

Scammers' motivations for burning tokens vary widely.

According to Slorg, some aim to create chaos, while others use it as a tactic to manipulate token supply.

By reducing the number of available tokens, these fraudsters can obstruct user sales, either stabilising or artificially inflating token prices.

Blockchain security experts Beosin and PeckShield support Slorg's insights, suggesting that scammers might be manipulating tokenomics or misleading users to exploit decentralised finance (DeFi) protocols associated with the token.

PeckShield posits that this manipulation allows for altering the circulating supply of tokens, while Beosin believes scammers might use this method to deceive users into thinking their token's circulation is stable by destroying tokens.

Beosin stated:

“For example, burn someone else's tokens to raise the token price and gain profits from some DeFi protocol that is related to the token.”

Slorg advises users to remain vigilant and verify token details before engaging in transactions.

Tools from Jupiter and RugCheck can help identify risky tokens and mitigate such scams.

Staying informed and cautious with emerging token features is crucial for protecting your crypto assets.