Magnate Finance, a lending/borrowing platform on Coinbase’s layer 2 protocol Base, has rug-pulled its users of $6.5 million, hours after on-chain sleuths like ZachXBT warned about the possibility of an exit scam due to several actions of the founders of the project.
Earlier on Aug. 25, the Magnate Finance protocol deleted its Telegram group and took its website offline, raising concerns among users of a possible exit scam.
Magnate Finance also deleted their X account and removed all possible social media presence. ZachXBT had notified that the Magnate Finance deployer address is directly linked to the Solfire $4.8M exit scam.
Community Alert: Magnate Finance on Base will likely exit scam in the near future currently with over $6.4M TVL.
The deployers address is directly linked to the Solfire $4.8M exit scam. pic.twitter.com/mBDUy3D66j
— ZachXBT (@zachxbt) August 25, 2023
Just hours after deleting the Telegram group and taking their website down, the project developers manipulated the price oracle of the protocol and removed all the assets, leading to the collapse of the $6.4 million total value locked in the protocol.
Blockchain analytic firm Peckshield notified that the scammers behind the project transferred $1.34 million worth of DAI tokens to a new address starting from 0x0664 and later bridged $1 million of the stolen funds to the BNB chain. Peckshield also tracked five different wallets linked to the Magnate Finance scammers.
The scammer behind the rugpull has bridged the majority of the profits to Ethereum L2 platforms, Arbitrum, and Optimism, along with the Binance chain through Stargate. Currently, around 295 ETH and 1.3M DAI are still held on the Base Chain.
Exit scams and rug pulls have become a very common tactic of scammers, especially in the decentralized finance ecosystem due to the added convenience of decentralization. This is evident from the fact that the total value of cryptocurrencies lost in exit scams and hacks amounted to $656 million during the first half of 2023.