The recently established DEX ArbiSwap of Ethereum’s first L-2 solution, Arbitrium, has gained attention when it is alleged that it defrauded customers by taking more than $100,000 from the platform’s liquidity pools. The ARBI token’s value experienced a sharp decline from $1.5 to just a fraction of a cent within a day. In addition, the developer acted independently and performed fraudulent activity, as revealed by the on-chain data causing this drop.
The developer minted around 1 billion fake tokens and swapped them for USD Coin (USDC) and approximately 69 ether (ETH). As developers mostly controlled the liquidity pools, it may have been easier to shut down the platform and escape with the funds.
Liquidity pools refer to token pairs held by smart contracts on decentralized exchanges, with developers initially seeding both sides of a token couple. ArbiSwap had only $4 million accessible in Europe early on Thursday morning, according to blockchain data from DEXTools. However, after the service’s launch in Feb, its total locked value (TVL) quickly rose to $4.4 million.
ArbiSwap’s 100% revenue promise for ARBI holdings gained immediate user interest in the platform. Developers’ actions are a classic rug pull: set up & promote a functional decentralized finance app, then disappear with investors’ money. We create a token and list it on a DEX. Developers close, reduce liquidity & vanish after investors buy tickets hoping for profit, leaving them empty-handed.
An Ethereum’s NFT Project’s Recent Move Triggers Allegations Of A Rug Pull
After generating over $5 million in ETH through last year’s mint, FriendsWithYou, a renowned art team, announced a significant development regarding their Ethereum NFT project, Friendlies.
The team announced they were abandoning the project and deleted their Twitter account, leading to suspicions of a rug pull. This incident highlights the need for greater transparency and accountability in the Defi industry.
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However, certain community members are devising a strategy to take over and continue with the project. In a now-deleted tweet thread, the project’s founders explained that they have temporarily decided to halt Friendsies and all upcoming digital items.
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