Developers Abscond with Funds in ArbiSwap Rug Pull6. März 2023
• ArbiSwap, a recently launched decentralized exchange, rug-pulled after withdrawing over $100,000 from the platform’s liquidity pools.
• The rogue developers minted a billion fake tokens and swapped them for USDC and ETH before disappearing with the funds.
• The ArbiSwap platform has now dropped to $4 million in liquidity and its token ARBI is worth less than a cent from its original price of $1.50.
ArbiSwap Rug Pull
Developers Abscond With Funds
The ArbiSwap decentralized exchange runs on the Arbitrum blockchain and was recently rugged by its own developers. Over $100,000 of user funds were stolen by the lead developers who controlled the exchange’s liquidity pools. They minted a billion fake tokens which they then swapped out for USDC and almost 69 ETH before absconding with the funds.
Investors Lured By False Promises
The platform had been launched in February 2023 and had quickly grown to have a TVL enterprise of $4.4 million due to promises of low fees for crypto trading on the platform as well as an offer to return 100% of all generated revenue to ARBI holders. Unfortunately, this rug pull move resulted in investors losing their funds as well as seeing ARBI drop from its comfortable position of $1.50 to less than a cent within just 24 hours.
DeFi Still Susceptible To Rug Pulls
Due to an error committed by the rug pullers, an arbitrage bot was able to earn back some of the stolen funds – around $112,000 – for pool2 farmers. Investors can also use their router address to remove their liquidity or revoke permission for further security enhancement while those whose funds were deposited into contracts ending with 392B4 are safe from harm since these contracts weren’t affected by this exploit at all.
Market Impact Of Rug Pulls
This comes at a really tough time for DeFi investments wherein scammers act as developers who launch applications amid fanfare only to eventually abscond with user’s money in what is commonly termed as ‘rug pulls’; such incidents are becoming increasingly frequent in DeFi markets resulting in much mistrust amongst investors about investing in DeFi projects altogether despite many legitimate projects that continue to exist in this space today as well.
Rug pulls are unfortunately still very common within DeFi markets due to its lack of regulatory oversight being taken advantage of by malicious actors; however, investors can still take steps towards protecting themselves against such scams such as revoking permissions or removing liquidity through direct interaction with contracts when needed so that they don’t end up being victims themselves like those who invested into ArbiSwap did just recently.