ETHTrustFund DAO transfers $2M treasury in apparent rug pull
ETHTrustFund (ETF), a Base network protocol that advertised itself as similar to Olympus or Wonderland, transferred $2 million from its treasury to Tornado Cash and Railgun mixer apps on July 20 and deleted all of its websites and social media accounts. This caused security experts to conclude that the project was a “rug pull” or exit scam.
The incident was first reported by crypto investor and X user Octoshi on July 21. According to Octoshi, the project’s treasury had been sent to a new address the previous day.
On July 22, blockchain security platform PeckShield shared the report. According to the blockchain security firm, ETHTrustFund developers transferred the funds to mixer apps Tornado Cash and Railgun in an apparent attempt to launder them.
According to an archived version of the ETHTrustFund developer documents, the project was conceived as a decentralized autonomous organization (DAO) with rebasing features, similar to Olympus, Wonderland or other similar projects. The fund issued blockchain-based bonds and sold them to investors in exchange for cryptocurrency. It also “rebased” or issued new ETF tokens to users who staked their tokens in the fund’s smart contracts.
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In addition, ETHTrustFund featured a new twist on the classic rebaseDAO idea: instead of constantly rebasing to produce more tokens, the fund would purportedly slow its inflation after a period of time and begin to “debase” or destroy its own ETF tokens, pushing up the remaining tokens’ prices over time. Meanwhile, all of the assets invested into the fund would be used to generate yield for tokenholders.
However, the debasing period appears to have never been reached. According to Octoshi, ETHTrustFund lead developer Peng stopped responding to Telegram messages in April before finally rugging the project on July 20.
Rug pulls continue to be a frequent source of losses to crypto investors. In June, the Gemholic protocol was accused of conducting a $3.5 million exit scam after it allegedly promised refunds to investors before transferring the funds to its own team instead. In March, investors lost $1.4 million when admin accounts associated with the Ordiz bridge deleted their socials and transferred all remaining funds to new accounts, leaving users unable to withdraw from the bridge.
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