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OysterPearl (PRL) Confirm Founder Has Exit-Scammed


Within the space of a few hours, a scandal has emerged surrounding one of the most hyped projects of the last crypto bull run. The team behind blockchain cloud-storage advertising solution Oyster Pearl (PRL) has apparently confirmed that founder Bruno Block exploited a bug in PRL’s smart contract to grant himself as many as 4 million tokens. These tokens were then immediately sold on KuCoin. The estimated value was roughly $1 million.

In reaction to the news, KuCoin, IDEX, Cryptopia, and PayFair have all suspended trading, withdrawal, and deposits of PRL. Oyster Pearl’s marketcap has been decimitated, falling from a high of around $20 million yesterday to around $6.3 million at time of writing.

How the Exit-Scam Unfolded

News of the scam broke through posts by several users warning of suspicious activity on the /r/oyster subreddit. Multiple posts identified suspicious activity related to the Oyster Pearl smart contract through Etherscan.io. It appears that someone with director privileges altered the smart contract to essentially reopen Oyster Pearl’s ICO, allowing them to receive 5000 PRL in exchange for 1 ETH. These were then moved to KuCoin and traded for Ethereum and Bitcoin, and these funds were then moved to private wallets.

The team behind Oyster Pearl have released a statement confirming rumors of an exit-scam by founder Bruno Block. They have also listed the Ethereum and Bitcoin addresses which the KuCoin funds were withdrawn to, asking their community for any help in identifying the identity of the project’s anonymous founder.

The links provided by the Oyster Pearl team show that the Ethereum address has a current balance of 188 ETH, worth approximately $36,812. The Bitcoin address has received a total of 70 BTC, worth around $445,550. The BTC has since been moved to other addresses, and the wallet initially implicated in the exit-scam is now empty.

The associated addresses are:

Ethereum – 0x0001Ee57Bb28415742248d946D35C7f87cfd5A54

BTC – 17pwqhD9dLGMcMZD9xvKxiePHNffHV5T6y

Why Now?

Posts on /r/oyster and /r/cryptocurrency related to the news are full of speculation regarding Bruno Block’s motives and timing. One point of note is that the exit-scam seems to have been executed at a time when other team members were likely to be sleeping, minimizing Bruno Block’s chances of detection.

From a longer term perspective, the timing of the exit-scam seems strange, since PRL was trading massively below it’s all-time high. PRL’s peak value of around 23 cents per token and $20 million marketcap on Monday is a long way from an all-time high of around $4.83 per token and $153 million marketcap seen back in January.

However, several users have pointed out that KuCoin is implementing a KYC policy for large withdrawals from November. Bruno Block’s exit-scam was likely timed to take place before the KYC policy made this action considerably more difficult.

Who is Bruno Block?

Amazingly, even the team behind Oyster Pearl don’t know the identity of the project’s founder. The statement they’ve released regarding the exit scam asks users to help them identify them using any clues their able to piece together.

Bruno Block stepped down as CEO of Oyster Pearl several months ago, but he has remained active on /r/oyster and continued to defend the project’s viability. His most recent post on /r/oyster talked about the toll that running the project had on him:

“I keep checking on progress and advising, recently I’ve been taking a step back to recover the energy I spent from July 2017 – May 2018. I worked unsustainable hours so I’m try to ‘pay back’ the mental toll it all took on me. For example I developed short term memory loss which I’m trying to heal.”

In April, Bruno posted a screed on /r/oyster bemoaning the attitude of speculative investors in the projects:

“The one year anniversary of me designing the Oyster Protocol is coming up. In that time I have had in-depth constructive conversations about the utility and operation of the protocol with around three, three people. Stefan, Automyr and Rebel. The last two are devs who work for me.

Do you know how unbelievably disastrous this is? Do you know why the token sale raised only $75k? Because I didn’t hype Oyster into a part of this mindless crypto-bubble. I focused on the substance/utility and 99% of people glossed over it. Yes, the b-word you’ve all been dreading: bubble.

Do you know when financial bubbles form? When everyone is impatiently greedy at the same time and follows the next person. When no one focuses on utility and only on their own short-term greed and how their cousin made money, bubbles form and always pop.

Are you kids too young to remember the dot-com bubble? Would you like me to rename Oyster to pets.com? Pets.com had millions of dollars in revenue, was a household name in the US, and 2 years after their IPO they declared bankruptcy. Why did this happen? Because greedy investors of the IPO were only thinking about making short term gains and didn’t focus on the real utility of the business model.

If you don’t understand the storage-peg, sell all your PRL and stop turning Oyster into a bubble. You are the same ass-hat who posts gay-porn and green arrow memes in Oyster Trading and you are not welcome here. I’m sure you’ll find plenty of pump-and-dump bubble coins on CMC, go knock yourself out.”

Ironically, Bruno’s most recent self-post on /r/oyster announced a 5 ETH bounty for anyone able to find bugs in Oyster Pearl’s new multi-sig variant smart contract.

What Now for Oyster Pearl?

In the short term, the price is almost certain to continue trending downwards. The Oyster Pearl team’s statement has confirmed that users’ PRL balances are safe and that the project will continue:

“We will not let [Bruno’s] selfish actions today damage the long-term viability of the project.”

However, recovering from an exit-scam from the project’s founder will be extremely difficult. The plight of NANO following the hack of the BitGrail exchange is informative here. The development team behind NANO was recently absolved of responsibility for the hack, and the sentiment within the cryptocurrency community has long been that the hack was entirely the responsibility of the exchange rather than the NANO team. Despite this, NANO has struggled even more than other coins during the current crypto bull market.

In the case of Oyster Pearl ,the project’s founder has been identified by both the project’s biggest supporters and its development team as being responsible for the hack that’s tanked PRL’s price. It seems very unlikely that the project could come back from this.

There may also be wider implications for the cryptocurrency space. Oyster Pearl has now become one of the biggest Ethereum-based ICOs to end in an exit-scam, at a time when the Ethereum price seemed to bottoming out after mass cash-outs of ICO-raised funds. Oyster Pearl’s cloud storage model was based on using the IOTA Tangle, and the team behind IOTA will surely want  to distance themselves from Oyster Pearl and Bruno Block as much as possible to avoid being tainted with the negativity that now surrounds this project.

And Oyster Pearl’s exit-scam is likely to sharpen negative criticism of the cryptocurrency space in general. Oyster Pearl’s statement mentions that the smart contract behind the project had been independently audited three times without finding any vulnerabilities. That someone could exert such control over a project that was at one time valued in excess of $150 million while remaining anonymous is a serious black mark against the entire cryptocurrency space.

About Christopher Williams

Christopher Williams is a British writer based in South Korea with a strong interest in emerging technologies, cryptocurrency, and the development of decentralized apps.

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