In Possible Exit Scam, Chinese EOS Wallet Locks Up $52M of Customer Funds

Quite like cryptocurrency itself, crypto scams seem here to stay.

EOS Ecosystem, a wallet app that attracts investors to deposit EOS with promised high returns, has reportedly shut down and possibly run away with close to $52 million, according to an April 20 report. 

$52M is gone and more is potentially missing

The local media’s investigation of EOS block transactions found the balance of one of the EOS accounts associated with EOS Ecosystem had no more than 500 EOS tokens left. The account holder had removed about 890,000 EOS tokens on Monday morning. 

They dug a little further and tracked down a number of other accounts that also belong to the wallet business. One of the main accounts had received about 19.36 million EOS tokens from small accounts that same day. At current EOS prices, the sum is about $52 million.

The report also says there might be more yet to be discovered. 

Transaction metadata suggests that the funds might already be moved to Huobi Exchange. Huobi promised to put an alert on it and freeze the funds as soon as they could detect it.

Who’s behind it?

This scam seems to have started with a team called”w.io.” They claimed to be part of the core team of Starteos, a Chinese crypto wallet based on the EOS network, in order to gain public trust. Offering high returns as bait, they lure uninformed crypto newbies to deposit EOS into the group’s account using the EOS Ecosystem App. 

Since the release of EOS in 2018, several organizations have run investment scams involving using EOS. EOSCUBE, EOSFIN, and EOS Vote all claimed to build legitimate products on the EOS network, and they all turned out to be scams, according to Chinese media. 

At time of press, the victims of the EOS Ecosystem Wallet App have formed a WeChat group to coordinate legal action and fight back.