Binance Smart Chain-based yield farming protocol Arbix Finance was identified by blockchain security company CertiK as a rug pull.
According to the firm’s incident analysis, there were several reasons why the project was flagged. The security firm states that “The ARBX contract has mint() with onlyOwner function, 10 million ARBX tokens were minted to 8 addresses,” and 4.5 million ARBX was minted to a single address. Following this, CertiK confirmed that “The 4.5M minted tokens were then dumped.”
The firm also reported that the $10 million in funds deposited by users was directed to pools that are unverified, and eventually, a hacker drained all the assets from the pools.
Using the platform’s Skytrace tool to analyze the risk of fraud, the firm determined that the hacker moved the funds to Ethereum through decentralized exchange AnySwap USDT.
The term “rug pull” is used to define events where developers abandon projects entirely after receiving a huge amount of investments in their fake crypto or decentralized finance project. Scams such as this are very prevalent in the crypto industry and record over $7.7 billion worth of cryptocurrency funds lost by scam victims globally.
A report by Chainalysis suggests that rug pulls contributed the most to the increase of money lost through crypto scams in 2021. The report notes that “37% of all cryptocurrency scam revenue in 2021” were rug pulls.
Back in November 2021, investors lost around $57 million worth of Ether (ETH) in a rug pull by AnubisDAO, a fork of OlympusDAO. Investors noted extravagant gains in the popular canine-themed meme coins were some of the reasons why they invested in the rug pull.