Stimulus Check Up | Apr 8, 2022 | 0
Crypto platform ARBIX flagged as a rugpull, transfers $10 million
Arbix Finance, an audited and supposedly trustworthy yield farming platform, has been flagged as a ‘rugpull,’ deleting its site, Twitter, and Telegram channel and transferring $10 million worth of deposited cryptocurrency.
Rugpulls, otherwise known as “exist scams,” are when pseudo-anonymous platforms or cryptocurrencies are created twith the ultimate goal of collecting funds for an allegedly legitimate “service” and then disappear with deposited funds.
Because decentralized networks are inherently untrustworthy, entities like CertiK attempt to evaluate them through audits that analyze a token’s smart contracts for signs of fraud, vulnerabilities, privacy problems, etc.
In Arbix’s case, CertiK’s conducted an audit on November 19th, 2021, whose findings had initially been a reason for users to trust Arbix Finance.
However, today CertiK tweeted that Arbix is now classified as a rugpull after the token’s smart contract was detected minting 10 million ARBIX to addresses under the owner’s control and then dumping them for Ethereum.
— CertiK Security Leaderboard (@certikorg) January 4, 2022
The operators of Arbix also moved $10 million in funds deposited by users to “unverified pools,” where they were converted to Ethereum.
The scammers then transferred the Ethereum to Tornado.cash, which acts as a mixer to make it harder to trace the funds.
“Tornado Cash improves transaction privacy by breaking the on-chain link between source and destination addresses. It uses a smart contract that accepts ETH deposits that can be withdrawn by a different address,” explains Tornado.cash’s frequently asked questions page.
“To preserve privacy a relayer can be used to withdraw to an address with no ETH balance. Whenever ETH is withdrawn by the new address, there is no way to link the withdrawal to the deposit, ensuring complete privacy.”
The funds and their movements are being traced, but the chances of them being recovered are slim at this point.
Yield farming is risky
The concept of yield farming is enticing because it promises cryptocurrency investors payouts without doing anything.
Users deposit cryptocurrency into yield farming platforms and then let automated algorithms monitor the fluctuations in the values of various tokens and send performance returns (harvest yields) to investors according to their trading threshold settings.
The main risks with the whole idea are cyber theft and fraud, as many of these platforms are either insecure or untrustworthy.
In October 2020, a similar platform named Harvest Finance was hacked, leading to the theft of $24 million from users.