Crypto Lender Kokomo’s Developers Use Wrapped Bitcoin for $4M ‘Exit Scam’
Developers behind the Optimism-based lending protocol Kokomo Finance appeared to conduct an exit rip-off over the weekend after manipulating tokens on the protocol to successfully steal $4 million in consumer funds.
An exit rip-off is alleged to happen when builders or promoters of a crypto challenge appear to market a legitimate-looking challenge to buyers solely to drag liquidity and erase all on-line or offline presence as soon as a large sum of money has been interested in that challenge.
Launched on March 25, Kokomo Finance allowed customers to commerce, borrow and lend wrapped bitcoin (BTC), ether (ETH), tether (USDT), USD Coin (USDC) and dai (DAI). It rapidly gained favor amongst Optimism customers.
On Sunday evening, Kokomo builders deployed an assault contract cBTC from the primary deal with of KOKO, Kokomo’s native tokens. They then set the reward pace, paused a borrow function and created a malicious contract to work together with the remainder of the protocol, safety agency CertiK said.
cBTC is a wrapped bitcoin by-product issued on the Ethereum community. The issuance of this was finally used to trick the protocol into falsely believing it had extra liquidity when there was none.
One other developer deal with was then used to maliciously approve a switch of spending over 7000 Sonne Wrapped Bitcoin, one other bitcoin by-product token on Ethereum. These tokens had been then used to swap all user-supplied liquidity to Kokomo, amounting to over $4 million.
Social media accounts and the Kokomo web site had been rapidly deleted within the following and inaccessible in Asian morning hours.
In the meantime, KOKO tokens fell 97%, wiping practically all worth for holders.
The exit rip-off was the newest in line of plenty of rising assaults and exploits within the crypto market. Earlier this month noticed a $200 million exploit of Euler Finance.
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