The burgeoning world of decentralized finance (DeFi) has once again fallen prey to a malicious rug pull scam. This time, the perpetrators were behind the Arbitrum-based project called Chibi Finance, which managed to steal over $1 million worth of various tokens shortly after its launch on Tuesday. The deception came to light after a thorough investigation conducted by security firms CertiK and PeckShield.
Chibi Finance was an allegedly yield-optimizing service that enabled users to deposit tokens and automatically earn rewards. As with other rug pull scams, the developers behind Chibi Finance had managed to garner legitimacy on social media, promote their project and raise funds, only to drain liquidity once the project’s tokens were offered to the public. The CHIBI token valuation took a devastating nosedive, dropping 98% following the scam.
Delving deeper into the modus operandi, it was revealed that Chibi developers utilized a malicious contract, which allowed them to siphon user funds from the platform’s smart contracts. After successfully swindling unsuspecting users, the ill-gotten tokens were sold for 555 ether (ETH) and transferred from Arbitrum to Ethereum in Asian afternoon hours on Tuesday, as reported by PeckShield. To cover their tracks, the stolen funds were subsequently laundered through the mixing service Tornado Cash, a known tool for crypto criminals intending to mask their transactional activities.
In a fitting show of guilt, Chibi Finance’s Twitter profile and website were deleted following the heist. More intriguingly, certain cryptocurrency influencers on Twitter who had previously promoted the project to their followers swiftly removed their posts about Chibi Finance, attracting criticism from the community.
The events surrounding the Chibi Finance rug pull cast a somber light on the challenges and pitfalls associated with DeFi. However, they also serve as a reminder for investors to exercise caution and conduct due diligence when considering new projects. While DeFi and blockchain technology hold immense potential for transforming financial services and markets, the prevalence of scams threatens to impede their widespread adoption and acceptance. By spreading awareness about such incidents and their consequences, the crypto community can continue to grow stronger and more resilient in the face of adversity.
Source: Coindesk
