ZachXBT Exposes $20M DeFi Scam Ring, Urges Vigilance
In A Nutshell
A recent investigation by ZachXBT, a pseudonymous blockchain investigator, has uncovered a series of scams perpetrated by a group behind multiple decentralized finance (DeFi) protocol rug pulls. This group, responsible for defrauding users of over $20 million through projects like Magnate, Kokomo, Solfire, and Lendora, has now been linked to a new scheme involving Leaper Finance on the Blast network. The warning comes amidst a broader context of rising cybercriminal activity within the DeFi space, shedding light on the importance of vigilance and due diligence in the crypto community.
The Scams Unveiled
ZachXBT’s in-depth investigation into Leaper Finance revealed a pattern of fraudulent activity by the group, including previous rug pulls amounting to substantial losses for investors. The group’s modus operandi involves allowing the total value locked (TVL) in their protocols to grow significantly before withdrawing all deposited funds, effectively leaving investors empty-handed. Additionally, they have been found to falsify KYC documents and engage with low-tier audit firms to lend an air of legitimacy to their operations.
Recent Activities and Warnings
The latest scam involving Leaper Finance saw the culprits funding a protocol address with nearly $1 million, suspected to be laundered from their previous fraudulent activities. This move was aimed at attracting more victims by adding liquidity to the project. Following the exposure of their connection to these scams, the group engaged in harassment of ZachXBT while simultaneously announcing a new ‘token launch’ in a brazen display of defiance.
The Broader Impact
This series of scams comes against the backdrop of a worrying trend in the crypto space, with Immunefi’s research report indicating over $200 million lost to hacks and rug pulls in just the first two months of 2024. The incidents underscore the persistent vulnerabilities within the DeFi ecosystem and highlight the critical need for enhanced security measures and investor education to combat such fraudulent schemes.
Our take
The revelations brought to light by ZachXBT’s investigative efforts are a stark reminder of the sophisticated and persistent threats facing investors within the DeFi space. While blockchain and DeFi have the potential to radically transform financial systems with greater efficiency and inclusivity, they also present new challenges in terms of security and fraud prevention. It is imperative for both investors and platforms to exercise increased caution, prioritizing transparency, due diligence, and robust security protocols to safeguard against such malicious actors. Additionally, the crypto community must continue to support the work of investigators and whistleblowers who play a crucial role in exposing and mitigating the risks of fraud.
Source
– Immunefi research report
