A prominent blockchain investigator, known pseudonymously as ZachXBT, has raised red flags about a group of scammers operating a new DeFi protocol. The warning comes as a preventative measure to shield potential victims from falling prey to this fraudulent scheme.
ZachXBT utilized the online forum platform X to expose their findings from an investigation into Leaper Finance, a lending protocol built on the Blast network. The analysis revealed a disturbing connection: Leaper Finance appears to be run by the same group responsible for several past “rug pulls.”
Rug pulls are a malicious tactic in the DeFi (decentralized finance) space. Developers of a DeFi project abruptly withdraw all funds from liquidity pools or project wallets, essentially draining the investments deposited by unsuspecting users. These scams often occur with little to no warning, leaving investors with worthless tokens or assets.
According to ZachXBT’s investigation, the group behind Leaper Finance is suspected of orchestrating rug pulls that stole millions from users of various DeFi projects. These include Magnate ($6.5 million), Kokomo ($4 million), Solfire ($4.8 million), and Lendora. Their past scams are estimated to have netted them over $20 million.
The investigators identified a pattern in the group’s tactics. They allegedly allow the total value locked (TVL) of their DeFi projects to climb significantly before pulling the rug. TVL refers to the cumulative value of all crypto assets deposited within a protocol. Additionally, the group is suspected of falsifying KYC (Know Your Customer) documents and employing low-tier auditing firms to create an illusion of legitimacy.
The reach of this group’s fraudulent activity appears extensive. ZachXBT claims they’ve identified their involvement in scams across various blockchain platforms, including Base, Solana, Scroll, Optimism, Arbitrum, Ethereum, Avalanche, and others. They are also thought to be behind scams on Hash DAO, Glori Finance, and ZebraDAO.
https://twitter.com/zachxbt/status/1779567425807065265
Following the exposé, the group behind Leaper Finance exhibited a flippant response, attempting to downplay the accusations. However, they swiftly shut down their online presence on platform X and disconnected their scam project’s websites, seemingly acknowledging the exposure. This incident underscores the critical need for vigilance in the DeFi space. Investors are urged to conduct thorough research before entrusting their funds to any DeFi protocol. Utilizing reputable
