Crypto sleuth warns of scammers behind DeFi protocol

Pseudonymous blockchain investigator ZachXBT issued a warning about a group of scammers attempting to entrap more victims in a new fraud using millions of stolen funds. 

In a thread on X, ZachXBT disclosed the findings of an investigation over Leaper Finance, a lending protocol based on Blast. According to the analysis, the group is behind several rug pulls, including those that hit users of Magnate ($6.5 million) , Kokomo ($4 million) , Solfire ($4.8 million), and Lendora.

“In the past they let the TVL grow to 7 figs before stealing all of users funds deposited to the protocol and falsify KYC documents + use low tier audit firms. They now have launched scams on Base, Solana, Scroll, Optimism, Arbitrum, Ethereum, Avalanche, etc,” noted ZachXBT.

The group is also believed to be responsible for scams on Hash DAO, Glori Finance, and ZebraDAO. Losses attributed to the group are estimated at over $20 million.

A rug pull takes place when the developers of a blockchain-based protocol suddenly withdraw all of their funds from a liquidity pool or project wallet, essentially draining the funds invested by others. This usually happens without any warning, leaving investors with worthless tokens or assets.

As part of the latest scam endeavor, the group reportedly funded a Leaper Finance address on the Blast network with nearly $1 million laundered from previous scams, adding further liquidity to lure victims.

Shortly after Leaper Finance’s connection to the scams was revealed, the group replied to ZachXBT, harassing the investigator while announcing a ‘token launch.’

“Nice work! My comrades here at Lazarus fear you yet admire you!,” they said in reference to the North Korean hacker group Lazarus. Leaper Finance and Glori Finance accounts on X have been deactivated, and the projects’ websites have also gone dark.

According to a Feb. 29 research report by blockchain security firm Immunefi, over $200 million worth of cryptocurrency was lost to hacks and rug pulls within the first two months of 2024 across 32 individual incidents.

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