Thursday, July 25, 2024

Reports have emerged indicating that Chibi Finance, a decentralized finance (defi) platform built on Arbitrum, has allegedly orchestrated an exit scam, leaving its users in distress. Blockchain intelligence firm Peckshield has provided a comprehensive account of the incident, revealing that approximately $1 million worth of cryptocurrency assets were illicitly withdrawn and converted into Ethereum.

According to Certik, a smart contract auditor, Chibi Finance’s disappearance marks the twelfth exit scam recorded on Arbitrum this year. The alarming incident came to light on June 27, 2023, when Peckshield’s Twitter alert system notified the community of funds being drained from Chibi Finance. Peckshield’s alert disclosed, “Seems like Chibi Finance rugged. $1M worth of cryptocurrencies were drained. The stolen funds, which have been swapped for 555 ETH, were bridged from Arbitrum to Ethereum. They have already been transferred into Tornado Cash.”

The perpetrators of this scam have erased all traces of Chibi Finance, wiping its website, Twitter account, Discord server, Telegram channel, and Medium account from the internet entirely. Chibi Finance had promoted a “yield farming optimizer” on Arbitrum, enticing users with the promise of earning “auto-compounded yields at optimal intervals” by leveraging their smart contracts. Users had entrusted their assets to Chibi’s vaults to earn the project’s native token, CHIBI.

Prior to the team’s sudden disappearance, CHIBI was trading at $1.35 per unit. Presently, the coin’s value has plummeted to 0.0095, equivalent to slightly less than one U.S. cent. An archived version of the project’s website reveals its relative novelty, with its smart contract undergoing an audit by blockchain auditor Solid Proof in May 2023.

The exit scams occurring within the Arbitrum defi space have raised concerns and skepticism among investors and enthusiasts alike. The ease with which scammers exploit vulnerabilities and abscond with significant amounts of cryptocurrency highlights the need for increased security measures and regulatory oversight. Share your thoughts and opinions on this distressing trend in the comments section below.

Frequently Asked Questions (FAQs) about defi exit scam

What is Chibi Finance?

Chibi Finance is a decentralized finance (defi) platform built on top of Arbitrum, offering users the opportunity to earn auto-compounded yields through yield farming.

What happened with Chibi Finance?

Chibi Finance allegedly executed an exit scam, wherein approximately $1 million worth of cryptocurrency assets were illicitly withdrawn and converted into Ethereum. The project’s website and social media accounts have been completely removed.

How were the funds stolen?

According to reports, the scammer utilized a malicious contract to exploit vulnerabilities in Chibi Finance’s smart contract. By assigning the malicious contract to a key role, the scammer was able to withdraw funds from Chibi Finance’s contracts and transfer them to their own address.

Is this an isolated incident?

No, this is not an isolated incident. Chibi Finance’s exit scam marks the twelfth recorded on Arbitrum this year, raising concerns about security and trust within the defi space.

What can be done to prevent such scams in the future?

To prevent exit scams and protect users, it is crucial to implement robust security measures and conduct thorough audits of smart contracts. Additionally, regulatory oversight and transparency can play a vital role in ensuring the integrity of defi platforms.

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