The platform has denied any misconduct. Tokenlon stated that it does not hold user funds and emphasized that all transactions can be transparently tracked on the blockchain.
Blockchain investigator ZachXBT is known for consistently calling out crypto platforms and entities he suspects of engaging in questionable or illegal practices. In his latest claims, he has shifted focus to Tokenlon, a relatively lesser known decentralized exchange with roughly 17,000 followers on X.
Tokenlon Comes Under Increased Scrutiny
ZachXBT has alleged that a significant portion of trading activity on Tokenlon may be linked to illicit sources. These include romance scams, human trafficking operations, investment fraud schemes, and underground markets in China.
He also referenced Tokenlon’s co founder Ben He Bin and suggested that enforcement action could potentially be taken against Tokenlon as well as imToken. Additionally, he highlighted other platforms he believes are connected to suspicious fund flows, including Butter Network, HiFiSwap, and SWFT Blockchain, urging authorities to prioritize them for investigation.
One user reported that their friend’s mother lost 270 ETH to a scam, with the funds allegedly routed through Tokenlon. In response, ZachXBT noted that he has encountered many similar cases from victims. Although Tokenlon presents itself as a decentralized platform, he argued that in practice it may not fully operate as one.
In reply, Tokenlon acknowledged ongoing discussions about illicit funds interacting with decentralized systems. The platform reiterated that it does not custody user assets and stressed that all transactions are publicly traceable on chain. It firmly stated that it does not support or enable criminal activity.
Tokenlon added that while permissionless systems can be misused, addressing such challenges requires coordinated efforts involving wallets, security firms, and law enforcement agencies.
Questions Surround Tokenlon’s Decentralization Claims
ZachXBT also referenced a 2022 report by Cryptoforensic Investigators, which raised concerns about Tokenlon’s decentralization claims. The report explained that while platforms like Uniswap and 1inch operate entirely through immutable smart contracts, Tokenlon appears to function differently.
According to the report, Tokenlon, which is linked to the imToken wallet and its parent entity, enables users to swap Bitcoin through its imBTC DApp. The analysis suggested that this setup more closely resembles a centralized over the counter service than a truly decentralized exchange.
It described a process in which Bitcoin is sent to wallets controlled by Tokenlon, recorded off chain within its system, and later converted into imBTC before being swapped for USDT. The report further claimed that imBTC behaves like a centralized asset pegged to Bitcoin, with Tokenlon retaining custody of the underlying BTC, similar to how stablecoin issuers manage reserves.
In addition, a 53 page working paper titled How Do Crypto Flows Finance Slavery The Economics of Pig Butchering, published on March 28, 2024, found that approximately 57 to 60 percent of Tokenlon swaps between 2022 and 2023 involved addresses associated with scam networks. The study alleged that victim funds in ETH or USDC often pass through Tokenlon before being converted into USD or DAI and eventually reaching centralized deposit accounts.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
