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BeachSwap - I Had a Front Row Seat in the Biggest Rug Pull / Scam on SmartBCH
I am extremely sorry for everyone who was fooled by BeachSwap and lost funds in this rug pull / scam.
I was deceived myself and lost quite a lot of my own crypto portfolio in this rug pull. But what hits me even harder than the loss of funds is the loss of trust in my sense of who is trustworthy and who isn't. My sense was so extremely wrong in this case...
I will be publishing at least three articles about this incident - as I had a front row seat in this whole thing.
I do it for several reasons:
I want to collect every bit of information I have about the scammer. I want him to be doxxed and caught. I hope the funds can be returned to the rightful owners.
I want to present all the occurances that led me to trust that scammer. Hopefully, it will help me learn from my mistakes and help me spot red flags - how subtle they may be.
I also hope that it will show you that I was not part of the scam - but in fact I was actually scammed myself.
I need to process the loss of funds - and especially the loss of trust in my sense of whom I can trust and whom I cannot.
I was in a terrible relationship with a certain person more than a decade ago. I was young and unexperienced and naive. Back then I trusted that person unconditionally when I shouldn't have. And I lost a lot of money because of it. It took me years to overcome that mistake and regain trust in myself. In my ability to judge whether a person is trustworthy or whether they are not.
Ever since that ad relationship experience I had been quite cautious with whom I trust - and I was sure that I had a solid gauge on who is trustworthy and who isn't.
The rug pull yesterday made me realise that I was completely fooled by a scammer - and my sense of trust did not serve me well at all.
I want to psychologically overcome this incident more quickly this time than the last time I misjudged someone. It always hurts when you find out that your trust was abused. The more you trusted the person, the more it hurts. And let's just say that last night I was shaken to the bone. My entire body was in contractions.
I estimate that I lost about 2 BCH in total in the BeachSwap scam. I bought about 0.55 BCH or so in the presale - first a modest 0.05 BCH and after the community suggested that the unsold BEACH tokens from the presale will be distributed to the presale buyers I saw a great opportunity and bought another 0.5 BCH. (I may slightly misremember these numbers.)
The distribution of the unsold BEACH tokens took the scammer forever. He actually created two new test tokens and sent them to everyone to make sure everyone would receive the correct amount.
That move increased my confidence in the credibility of that person enormously. He went above and beyond to make sure everything would go smoothly and everyone would receive the correct amount of BEACH tokens.
He even published an article on medium about how he changed the presale smart contract by artificially triggering the hard cap of the presale - as the smart contract was actually programmed to burn the unsold BEACH. He did that because of a community vote that wanted him to distribute the unsold tokens instead of burning them - and that's exactly what he did. He took suggestions from the community on how the DEX would most likely become a success. And he also listened to the community to end the presale rather early. The presale brought in a little more than 101 BCH.
Here is a link to an archived version of the article - which he deleted after the rug pull - in which he explained how he circumvented the burning of the unsold BEACH tokens:
If you asked me, I would say it was well-written and showed a good understanding of smart contracts. I thought it proved to me that he had the best interests of the community in mind - and that he had the necessary skills, too,to make BeachSwap a success.
I fell asleep right before the DEX launched, because the testing of the BEACH distribution took the scammer forever. I had a hard day at work behind me - despite the day having been a Sunday. The end of the presale was set to 19:00 UTC - which was 21:00 in my local time and the testing of the distribution of BEACH tokens took about 4 or 5 hours if my memory serves me well. I fell asleep around 0:30 and when I woke up almost 5 hours later, the price of BEACH had jumped up from the presale value - adjusted for the distribution - of $1.09 to about $2.60 and I added a little more than 1 BCH or so into the BEACH - BCH liquidity pool that was robbed in the rug pull - meaning the BCH are gone and only worthless BEACH was left.
I proceeded to farm with almost all of my SmartBCH assets on BeachSwap and even bought the dip at around $1.60. I don't remember how much I bought exactly, but I kept putting almost every BEACH I earned and bought into the vault which locks the BEACH tokens for 7 or 30 days respectively. I was a firm believer in the DEX and the dev and I was in for the long run. These worthless BEACH tokens are still locked in the vaults.
And finally, when I checked the website and saw that the BEACH price was below 1 Cent, I assumed that it must have been a glitch. I refreshed the page and loaded it up on another device to double-check - and I even bought several 10 thousands more BEACH. I then took a screenshot of the website and sent it to the BeachSwap dev. Once he saw my screenshot, he deleted the BeachSwap Telegram group and then his Telegram account. I then knew he was a scammer and he had just rug pulled. Before he deleted his account I still believed in a glitch.
It was at this point that I knew this wasn't a glitch. I knew it was a rug pull and in a panic I unstaked everything I still had on the BeachSwap farms. I had almost my entire SmartBCH portfolio on these farms. After I unstaked my funds and removed liquidity from the pools, I then thought about what I could do to stop the scammer from exiting with the funds. I posted in the Coinflex Telegram group that BeachSwap rug pulled - hoping they can freeze the funds.
You can verify yourself that I lost quite a substantial amount of crypto in the BeachSwap rug pull / scam. Again, here is my account 0x88Cbd6227F3B33EDCa69aee5cA7527Fa4B12Ef49.
I have nothing to hide. I'm just not great with smartscan.cash and find it quite confusing and cumbersome to work with. Otherwise, I would try to link to all relevant transactions I described in the article. But honestly, I still feel like shit - especially after not having slept well and not having slept much. And writing this article took my entire morning. So please excuse that I'm not hunting for transactions - especially as they were plentiful.
Here is a screenshot proving I owned 0.44% of the entire BEACH - BCH liquidity pool after the rug pull. Almost all my BCH was gone at this point - and mostly the worthless BEACH token was left.
Another reason why I trusted the scammer was that the BeachSwap website was great. It looked great, it worked great, it had great features and a great UI. The dev seemed very competent and friendly. He took suggestions from the community. And he created very, very enticing incentives for providing liquidity and for buying BEACH tokens. The vaults were something new to me. They were an idea that I actually liked a lot.
I even still believe that the scammer's strategy would have been successful in the medium to long term - and he would have made a lot of money legitimately if he just had kept the DEX running. That's what I find so confusing. Why go through all this trouble, create something great and then kill it and rip people off when doing it legitimately would have been insanely profitable, too. I still can't believe he actually rugged - but he did. The scammer completely fooled me. And it makes no sense to me - still.
I lost a lot of money, because I trusted in the project and the dev. But what I find even worse is that I made a connection between that scam and my name - and my face. The scammer was anonymous, but I'm not. Nobody knows where the scammer lives, but people can find out where I live.
Obviously, it was a terrible idea to try and manage the BeachSwap Telegram group. I know that now - in hindsight. I didn't know that before, unfortunately. Otherwise, I would not have wasted my time and effort - and potentially trashed my reputation doing it. And for what? I didn't even ask for money, crypto or preferential treatment. I did it, because I wanted to help. Help BeachSwap - which I thought had a shot at becoming one of the top DEXs on SmartBCH. Help SmartBCH. And help BCH to reach its mission of becoming widely accepted as sound money for the world.
It all started when a person I know suggested that we should start a DeFi project together. That person has the coding skills and he approached me, because he thought I would make a good community manager.
And I loved that idea. I love communicating publicly - concisely and precisely. I love trying to bring people together and trying to keep the peace within the community.
Due to my involvement with an SEP20 token, I learned about BeachSwap early on. And we approached the developer and asked if we could have a farm on the new DEX. The developer agreed - and he was also approached by other token supporters who asked for farms, too. And he added several other farms. So far, so normal.
As it was early days for BeachSwap, I asked the dev whether he would be interested to do an extensive interview with me - similar to the interview I did with the MuesliSwap developers. In my interview with the MuesliSwap devs, I felt like I got to know them better and gained some trust to them. Therefore, I approached the BeachSwap dev, too. Let's give him a shot, get to know him as a person and learn all the details about BeachSwap.
Notice that I took the following screenshots after the scammer deleted his Telegram account. And thankfully, he didn't clear the chat history first - so that I actually was able to take the screenshots of our entire conversation.
The scammer first indicated being interested in doing an interview, but then never got back to me. Instead the did an AMA (ask me anything) on a SmartBCH telegram group. (I will publish that AMA shortly to preserve it for future investigations.)
"OK, so he decided to do an interview with someone else", I thought. "He could have told me that, but hey, no hard feelings."
Two days went by and I kept my eye on the BeachSwap Telegram group. I was excited about the new DEX and the new farms.
On October, 23rd I noticed that the BeachSwap dev (who turned out to be a scammer) needed help, because he seemed to be doing everything by himself.
And I asked him if I could manage the group while he was sleeping. He seemed to live on the other side of the world, so I would be awake when he sleeps.
The message I referred to is the last one on the previous screenshot. The conversation continued like this:
As you may notice, I didn't ask for anything in return. No monetary compensation, no preferential treatment, no nothing. I did want to help, because I believed that he was an honest developer and BeachSwap was a good DEX. I even believed BeachSwap had a shot at becoming the number 1 or 2 DEX on SmartBCH. That's also the reason why I was accumulating BEACH tokens like crazy.
Whenever the dev was asleep, I tried to answer questions based on previous public posts by the dev. And I made sure to forward concerns, questions and suggestions to the dev once he woke up.
As you can see, I was also making suggestions on which farms I believed were worthwhile adding to further improve BeachSwap.
And when people asked for a refund of the 5% staking fee, because the APR was being displayed incorrectly, I made sure to forward these messages to the dev. I pointed out to the community that I'm just the guy managing the Telegram group while the developer can't. And that I don't have access to the code - and not to the funds, either. Therefore, the developer had to make the decision on the reimbursements of the fees.
The developer seemed to need a lot of sleep. He was "sleeping" 12 hours before the presale ended. And just when I publicly stated in the BeachSwap Telegram group that I was starting to get worried, he reappeared to calm everybody - including me -down.
People stated that if he hadn't slept much in the prior days, then sleeping for 12 hours straight is entirely possible. I was put at ease by these statements.
I only learned about this fact now when I went through the AMA, but the scammer claimed to be located in the EU. Based on his sleeping and waking hours, I don't believe that at all. As I was watching the BeachSwap Telegram group, I noticed that he was active when I would be asleep. And I live in Germany, in the EU. I assume the scammer is based in Australia or New Zealand, possibly in some other country in the Asian Pacific area. If I had known that he claimed to be located in the EU, that would have raised a red flag. Unfortunately, I have only learned about it just now - after the rug pull.
People referenced the AMA and we're quite positively inclined by the fact that he participated in it. I planned to but didn't read the AMA myself, unfortunately. I actually planned to publish it as an article, but then was busy with my day job and with managing the BeachSwap Telegram group, unfortunately.
When Jt - a well-respected and knowledgeable BCH developer asked questions about the uploaded BeachSwap code, the developer acted like Jt was spreading FUD (fear, uncertainty and doubt) and acting hostile towards him - when in fact Jt was jus being factual, but friendly.
That did raise a red flag. Jt pointed out that some code was missing and other code was suspect. I didn't understand the full details of his concerns, but some code could have served for performing micro transactions that could allow the DEX to steal the funds that investors put into the liquidity pools. Jt pointed out that with the proper precautions that is not possible, but it really depended on the missing code. And Jt made the point that having this code was not useful on SmartBCH - because there is no gas station network. (Please excuse me if any of this is incorrect. I was in over my head with these technical issues.)
The scammer tried to explain that away and tried to make a case for why that code was useful. And he pointed out that he didn't include that code himself. In fact, he didn't fork SushiSwap but SquidSwap - which comes with that code - he claimed.
At this point a red flag was raised, but the scammer actually uploaded the missing code - which put me at ease. I assumed it was an honest mistake by an overworked and sleep-deprived dev. However, I didn't think that a scammer would go through the extra effort of uploading the code - when he could have just rug pulled then and there instead.
And yes, it was a bit weird that the scammer reacted like he was being attacked when Jt asked questions about the code. In hindsight, that was a red flag. At the time I believed that the dev is super stressed with being overworked and not having had proper sleep for days or weeks while he was trying to get the DEX up and running.
And once again, apart from the incorrect APR display for two pools, the website was flawless.
I didn't see that rug pull coming at all. The scammer completely fooled me. Just like someone said in the BeachSwap Telegram group before it was deleted:
"If this is a rug, it certainly is a nice one."
In fact, it was a high quality rug...
Once I sent a screenshot of the worthless BEACH token to the developer - he deleted the Telegram group and his profile. And that's when I knew he was in fact a scammer.
Thankfully, I have been able to unstake the assets that I still had left - after BEACH became worthless - when the website was still up. I "only" lost the entire BEACH - BCH liquidity pool and my BEACH vaults, but I was able to recover the assets from my other farms. In total, I estimate that I lost about 2 BCH worth of crypto - possibly more. And a lot of fees, a lot of time and effort - and the trust in my ability to read people.
It was the first presale I participated in - and it was an instarekt. 🙈
If you have something left in the BeachSwap liquidity pools or farms, these assets should be recoverable.
Only BEACH tokens are worthless now. And that means that the BEACH liquidity pools are full of worthless BEACH tokens - and the valuable BCH or flexUSD is gone.
All other liquidity pools still have their value. And you can probably retrieve your funds. But act quickly. The scammer may have a way to steal these funds, too. That may be the reason why he took the BeachSwap website offline - which makes retrieving your funds so much harder now.
This is the unofficial support group for those who got rugged / scammed by the BeachSwap scammer:
I truly hope that you will be able to recover your funds.
And I truly hope that the scammer will be identified and that the crypto can be recovered - and the people who got scammed receive their crypto back.
Prior to this, I believed a DEX wouldn't and couldn't scam on SmartBCH. The reason is that Coinflex is pretty much the only bridge out of SmartBCH right now. And I thought that deploying and running a DEX on SmartBCH would be too much effort to be worth it for the off-chance to get the crypto bridged out.
Obviously, I - and everyone who believed that line of reasoning - was wrong.