In what appears to be another draw in the decentralized finance (DeFi) space, the team behind Chibi Finance ran off with over $1 million in diversified assets. After the protocol was launched earlier today, user funds were quickly transferred to an Ethereum address and converted into Ether.
A “rug pull” is a term used to describe a type of crypto scam where a developer – or a team of developers – builds a reputation for a project and generates huge amounts of money by “inflating” it or creating enthusiasm in the community. Then, the developers drain the liquidity from the project tokens immediately after they are released, leaving the investors empty-handed.
Chibi Finance team steals 555 ETH from users
The developers of Chibi Finance, a supposed return optimization protocol built on the Arbitrum chain, have disappeared with more than $1 million in users’ funds. This rug was made possible as Chibi’s team deployed a malicious contract that enabled them to expropriate funds from the protocol’s smart contract, according to security firm CertiK.
1 / the @Chibi_Fi The exit scam is the twelfth incident we’ve recorded on Arbitrum in 2023.
The scammer funded EOA 0x80c with 10 ETH @tweet Withdraw on Ethereum and create a malicious contract (0xB61)https://t.co/G2xuHWVLaI
– CertiK Alert (CertiKAlert) June 27, 2023
The assets were then withdrawn from Chibi Finance’s liquidity pools on the Arbitrum Chain and sent to the Ethereum network, where they were exchanged for Wrapped Ethereum (WETH). This stolen money, which was sold for 555 ETH, was transferred to Tornado Cash, a decentralized cryptocurrency exchange.
Chibi Finance is supposed to be a DeFi protocol that allows users to stake their coins and earn rewards automatically. However, Chibi Finance’s digital presence has faded since this scam occurred. Access to the protocol’s social media accounts and official website is no longer available.
According to data from Certik, this Chibi Finance carpet haul is the twelfth incident to be reported on the Arbitrum Network in 2023.
The CHIBI symbol drops almost 100% after the rug is pulled out
After the rug was pulled, CHIBI – Chibi Finance’s native token – fell by 99.4%, according to CoinGecko Data. The coin opened trading at $1.62 below the 24 hours ago. As of this writing, the value of the CHIBI token is $0.0101445.
According to the blockchain security firm Beosin a reportLosses from rug withdrawals and scams in the cryptocurrency market surpassed those from DeFi attacks in May. Six carpet-drawing incidents — resulting in a loss of $45.02 million — were recorded in May, while the shortfall of 10 DeFi protocol hacks totaled $19.7 million.
To avoid falling victim to these scams, investors should raise their awareness and do due diligence before risking their money in the cryptocurrency market.
ARBUSD trading at $1.2105 | Source: ARBUSD chart from TradingView
Featured image from Shutterstock, chart from TradingView
