Benzinga | May 5, 2021 11:19AM EDT

WallStreetBets Launches Blockchain App To Combat Market Manipulation Following $2.25M Scam

Trading community subreddit WallStreetBets announced a blockchain-powered decentralized application (DApp) aiming to fight market manipulation.

What Happened: According to a Wednesday's announcement, the WallStreetBets community is collaborating with blockchain developers to create exchange-traded portfolios (ETPs) aiming to "fight back against corrupt institutions and to end dependence on them altogether."

The portfolios will be managed by a community-led so-called decentralized autonomous organization (DAO), which would be governed through a DApp with no centralized single third party that has power over it.

"The amalgamation of blockchain technology with financial markets is the next logical step for finance. [...] It will result in stronger, more democratized markets and will empower individuals around the world," the subreddit's founder Jaime Rogozinski said.

This DAO would allow for a democratization of the decisional power that would see WallStreetBets (CRYPTO: WSB) token holders vote to change the weight and exposure to stocks during voting cycles.

The subreddit's community became the paladin of anti-Wall Street financial activities after leading the "mother of all short squeezes" on GameStop (NYSE:GME), which resulted in significant losses for major hedge funds earlier this year.

Why It Matters: The announcement follows Tuesday's Bloomberg report of a scam targeting WallStreetBets that left its victims with at least $2.25 million in losses.

A Telegram group chat named "WallStreetBets - Crypto Pumps" pitched its users to invest in a token called WSB Finance (CRYPTO: WSBFINANCE) before a purported listing on cryptocurrency exchanges.

Readers of the announcement were invited to send Binance Coin (CRYPTO: BNB) or Ethereum (CRYPTO: ETH) and then contact the token distribution Telegram bot to receive their tokens.

The authors of the announcement were unaffiliated with the administrators of the WallStreetBets subreddit, and those who sent their crypto assets to the address were warned that the tokens could not be delivered because of a purported problem with the aforementioned bot.

Those users were then prompted to send the same amount of crypto assets to the address again to avoid losing what they invested in the scam so far.

According to Bloomberg, over 3,451 BNB -- equivalent to about $2.25 million as of press time -- were already moved away from the wallet where the victims of the scam were prompted to send their assets.

The scam followed a recent announcement that is currently pinned on top of the WallStreetBets subreddit warning of scams such as this one, clearly stating that any investment with its name is unrelated to it.

The scammer is seemingly happy with himself right now, as suggested by his last message -- "Buying lambo now."