The recently launched decentralized exchange, ArbiSwap, appears to have rug-pulled after withdrawing over $100,000 from the platform’s liquidity pools.
ArbiSwap Developers Abscond With Funds
The ArbiSwap decentralized exchange runs on the Arbitrum blockchain and was rugged by its own developers. Over $100,000 of user funds were stolen by the lead developers who controlled the exchange’s liquidity pools.
According to blockchain data, the rogue developers minted a billion fake tokens and swapped them out for USDC and for almost 69 ETH. They did this by swapping the contract, which included a recoverToken function that allows the developer to transfer user funds to their wallet. Then they pulled the rug on pool2, where all the stolen funds were stored. After siphoning off these funds, the developers have been unreachable and have been assumed to have absconded.
As a direct consequence of this rug pull, the platform’s native token, ARBI, has dropped to less than a cent from its comfortable position of $1.50 in just 24 hours. Currently, the ArbiSwap platform has a liquidity of just $4 million.
Investors Lured By False Promises
The ArbiSwap exchange was launched in February 2023 and skyrocketed to a $4.4 million TVL enterprise. It promised low fees for crypto trading on the platform. Furthermore, the platform also advertised that it would be returning 100% of all generated revenue to ARBI holders, which is what likely drew in most investors. The community had invested heavily into the project, believing it to be one of the harbingers of the bull run.
However, the developers shutting up shop, siphoning off funds, and disappearing could prove to be a bigger blow to the overall market, which is still recovering. This is a classic rug pull move, wherein scammers act as developers who launch a DeFi application amid much fanfare to attract heavy investments and then abscond with the funds.
DeFi Still Susceptible To Rug Pulls
Due to a mistake by the rug pullers, however, an arbitrage bot was able to earn back $112,000 for pool2 farmers. However, all is not lost for the victims of this exploit, as they can still use the router address to remove their liquidity. Furthermore, funds deposited in the initial contract ending with 392B4 are safe. In addition to withdrawing their funds by interacting directly with the contract, investors can also revoke permission for further security enhancement.
The rug pull is coming at a really tough time for the industry, which is still recovering after the bear market of 2022, which also saw several DeFi and NFT rug-pull scams. It goes to show that the DeFi space still needs to be maneuvered carefully, and users need to exercise caution before buying into such high promises of potential scammers.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.