Another DeFi project has reportedly been rug-pulled and lost about $10.8 million in investor funds. The hidden backdoor smart contract of Compounder Finance allowed developers to withdraw funds from the platform. According to the reports, $750,000 worth of wrapped bitcoin (WBTC), $4.8 million ETH, $5 million DAI and a small amount of other tokens have been drained off the contract. The anonymous coders of the protocol initiated the thievery. They put a threshold of around $10 million. Compounder’s token contracts were created only on Nov. 10. The threshold was met on Tuesday that gave hold of the funds to the schemers.
According to the Compound Finance’s founder, Robert Leshner, the name was faked to extract money from the investors and make it possible for the threshold to be reached.
After the fraud, the price of the Compounder’s native token, CP3R went down to nearly 99.7 % in the last 24 hours and price shrinked to $0.21.
So far no more information is available except that the fraud is under the scanner of investigation. An investor who lost $1 million is offering a $50,000 bounty for information leading to the seizure of stolen funds. The investors are willing to take the matter to the investigating agencies and will not move an inch back until the fraud is investigated and the money returns to them.
However, Leshner said that the theft has been deliberately done to defame Compound Finance and the Keep3r network and demanded an action against it.
DeFi tokens are gaining popularity over the last one year due to high returns, thereby flooding the market with new tokens and listing them on popular exchange platforms like Uniswap. Unfamiliar and new investors are attracted towards fraud by offering lucrative deals on social media platforms or paid advertisements. Over the past one year, some devs and founders are allegedly involved in practices like rug pulling and scams that harm the interest of the DeFi community.
In October, BREE token was on the peak enjoying aggregate market capitalization of $50 million. The token was associated with a two month old Ethereum based project called CoinBreeder that also included features such as staking NFTs. Individual users lost 50,000 coins on the open market. The project collected one million worth of ETH through ICO and presale offering was also lost through a hidden backdoor in a BREE contract.
A similar incident took place in September this year. KORE , a yield farming project and a resultant fork from more popular project CORE, suffered a rag pulling after it's market cap value reached as high as $113 billion, second after Bitcoin. When the smart contract was deployed on Oct 11th, it had a total coin supply of 10,000 KORE. But On Oct 31st, malicious developers used a backdoor to the smart contract to mint 1 billion fresh tokens.
Another token, TRUAMPLE was rag pulled by the developers stealing 1800 ETH in Auguest this year.The number of the so-called rug-pulls is on the rise. Investors should be very careful and selective while pooling money on the right project and trading a particular token.
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