Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Shaurya is an analyst/editor for CoinDesk’s markets team in Asia.
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
The newly-launched ArbiSwap app appears to have rug pulled users after removing over $100,000 from the platform’s liquidity pools.
ArbiSwap’s native ARBI tokens fell from $1.5 to a fraction of a cent in the past 24 hours. Blockchain data shows the developers minted 1 billion fake tokens, swapping these for USD Coin (USDC) and then for nearly 69 ether (ETH).
This was possible as the rogue developers controlled the project’s liquidity pools. Liquidity pools refer to the token pairs held by smart contracts on decentralized exchanges, with developers initially seeding both sides of a token pair.
Blockchain data from DEXTools shows just $4 million in liquidity on ArbiSwap in European morning hours on Thursday. The service was launched in February and quickly grew to $4.4 million in total locked value (TVL).
ArbiSwap offered swapping of various cryptocurrencies for low fees on its platform and advertised giving back 100% of all generated revenue to holders of ARBI, which likely piqued the quick interest for ArbiSwap among users.
The move is a textbook rug pull, a scam carried out by developers who launch a working decentralized finance application and carry out social media marketing to popularize it before issuing a token and listing it on a decentralized exchange (DEX).
After investors have purchased the tokens in the hopes of a positive return, the developers shut up shop, remove liquidity and disappear.
CoinDesk was unable to reach ArbiSwap developers for comment. At the time of writing, the links on ArbiSwap’s website were not working.
Sign up for Valid Points, our weekly newsletter breaking down Ethereum’s evolution and its impact on crypto markets.
By signing up, you will receive emails about CoinDesk product updates, events and marketing and you agree to our terms of services and privacy policy.
DISCLOSURE
Please note that our
and
do not sell my personal information
has been updated
.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a
strict set of editorial policies.
CoinDesk is an independent operating subsidiary of
which invests in
and blockchain
As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of
which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG
.
Shaurya is an analyst/editor for CoinDesk’s markets team in Asia.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
Shaurya is an analyst/editor for CoinDesk’s markets team in Asia.
Read More
A renowned decentralized finance (DeFi) platform, Arbitrum DEX ArbiSwap, recently experienced a major incident of rug pulls to the tune of more than $100K, leaving thousands of users devastated.
Rug pulls involve fraudulent exit scams by the creators of a DeFi project, in which they exit a project and take away the user’s funds along with them. This incident involved the devs behind ArbiSwap, a Uniswap derivative offering users the capability to swap their tokens as well as providing contract-based yield farming opportunities.
Reports suggest that ArbiSwap users had invested large sums of funds in the project, on the expectation of substantial returns. However, the project creators recently shut down their website and pulled the rug from beneath users, making away with all their funds.
Many of the affected users have been attempting to recover their funds, however, the developers have withdrawn the funds from their wallets, thus making it nearly impossible for users to be able to get them back.
Rug pulls can be extremely detrimental to the DeFi industry, as this incident shows. Such scams create general mistrust and threaten to discourage investors from participating in the ecosystem, since the potential to fall victim to rug pulls still exists.
At the time of writing, official comments from the project developers or sponsors are yet to be released, and it is yet to be determined whether there will be any chance of users recovering their funds.
