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Crypto Investigator Exposes Scam Network Linked to DeFi Protocols

Apr 15, 2024 at 04:48

Pseudonymous blockchain sleuth ZachXBT raises alarm bells over a syndicate of scammers orchestrating a series of fraudulent schemes, with Leaper Finance as their latest venture, following a string of rug pulls affecting Magnate, Kokomo, Solfire, and Lendora users.

In a comprehensive thread on X, ZachXBT unveils the findings of an extensive investigation into Leaper Finance, a lending platform built on Blast. The probe reveals a pattern linking the group to multiple rug pulls, with Magnate ($6.5 million), Kokomo ($4 million), Solfire ($4.8 million), and Lendora among the casualties.

The modus operandi involves allowing the Total Value Locked (TVL) to soar into seven figures before absconding with users’ funds and resorting to falsified Know Your Customer (KYC) documents and subpar audit firms. The group has expanded its fraudulent activities across various networks, including Base, Solana, Scroll, Optimism, Arbitrum, Ethereum, and Avalanche.

The nefarious activities extend beyond DeFi, with scams infiltrating projects like Hash DAO, Glori Finance, and ZebraDAO, inflicting estimated losses exceeding $20 million on unsuspecting victims.

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A rug pull occurs when protocol developers swiftly withdraw liquidity from a project wallet, leaving investors holding worthless assets. In the latest scheme, the group funneled approximately $1 million, laundered from previous scams, into a Leaper Finance address on the Blast network to attract more victims.

Following the exposure, the group responded by harassing ZachXBT and teasing a “token launch,” drawing comparisons to the notorious North Korean hacker group Lazarus. Subsequently, Leaper Finance and Glori Finance accounts on X were deactivated, and their websites vanished from the internet.

A report by blockchain security firm Immunefi reveals a grim statistic: over $200 million in cryptocurrency was lost to hacks and rug pulls in the first two months of 2024 across 32 incidents, underscoring the pervasive threat posed by malicious actors in the crypto space.

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