Kokomo Finance Pulls Exit Scam, Takes $4 Million In Investor Funds With It

The deployer of Kokomo Finance, a non-custodial lending protocol on Optimism and Arbitrum, that are fashionable layer-2 platforms on Ethereum, has rugged customers of $4 million.

Kokomo Finance Exit Scams, Stealing $4 Million

CertiK, a blockchain safety agency, tweeted on March 26 that Kokomo Finance exited the protocol and stole $4 million in person funds. 

#CertiKSkynetAlert 🚨

On 26 March 2023, Kokomo Finance carried out an exit rip-off and stole ~$4 million in person funds.

Particulars Beneath 👇 https://t.co/BEPwfahblz

— CertiK Alert (@CertiKAlert) March 26, 2023

In recent times, rug pulls have develop into a preferred method for scammers to steal hard-earned person funds. Right here, the deployer of the protocol applications the good contract to illegally pull out liquidity from its swimming pools, drastically impacting the token’s means to be freely traded, primarily crashing its worth.

Previous this heist, the safety agency first famous excessive slippages on the protocol’s native token, KOKO, whose worth is now down by over 98%. Trackers present that the token is $0.00064850 as of March 27. On the identical time, the crew had deactivated all of their social media channels, successfully reducing out everybody.

In a collection of strikes, the deployer of KOKO, the crew behind the protocol, first deployed the assault contract, lowering reward velocity and pausing borrowing. 

Afterward, the platform’s implementation contract was set into malicious code, which manipulated the primary contract behind the wrapped Bitcoin token (cBTC). 

This set in movement different occasions, which noticed the deployer spend 7010 sonne WBTC, which have been ultimately transformed to 141 WBTC price roughly $4 million at spot charges. The quantity was then withdrawn to an exterior handle by the manipulator. WBTC is a wrapped model of BTC, a token that tracks the worth of Bitcoin.

Auditor’s Report Confirmed No Sensible Contract Flaw

CertiK has stated that is the biggest rug pull they’d noticed on Optimism. Along with Arbitrum, the 2 are the preferred layer-2 platforms on Ethereum, enabling the launching of dapps in a scalable, low-fee surroundings. 

Though Kokomo Finance’s good contracts had been audited by 0xguard, and a report was launched on March 22, the auditor found no extreme bug.

@KokomoFinance is an open supply and non-custodial lending protocol constructed on Optimism and @arbitrum .– Launch on @DefiLlama – Audited by @0xGuard $KOKO TVL : 2M, is constantly rising, cash will circulation into this lending platform quickly when it’s deployed on @Arbitrum. pic.twitter.com/RduuHBWX39

— Az.eth (@0x_az) March 26, 2023

Earlier than the rug pull, Kokomo Finance enabled the buying and selling of, amongst different tokens, wBTC, ETH, DAI, and USDT. Per display screen grabs shared on March 26, Kokomo Finance had a complete worth locked (TVL) of $ $1,952,888, in line with DeFiLlama information. 

At this degree, this TVL represented an over 20x rise from March 24, when it stood at simply $67,000. Most of this was locked in Optimism with barely something in Arbitrum. A dive into their property beneath administration reveals that wBTC constituted 72% of all of the TVL whereas ETH made up 21%. 

Function Picture From Canva, Chart From TradingView