Another project with high-yield promises and an anonymous team has pulled the rug on its investors, stealing over US$2.3 million.
On 29 June, the WhaleFarm token plunged by almost 100% after its developers drained liquidity pools choked with several coins including BNB, USDT, BTC, ETH, ADA, LINK and DOT (Polkadot).
Mr. Whale Waves Red Flags
The project presented numerous red flags, as tweeted by crypto analyst Mr. Whale, such as high returns of up to 7,217,848% APY (Annual Percentage Yield). A DeFi project with exaggerated high APYs is too good to be true, and usually turns out to be a scam. Plus, an important pattern to detect shady projects is if the team behind it is anonymous – or if it’s backed by a certain organisation that doesn’t show who the developers are.
Despite its exaggerated high return percentage, the project saw some growth over time, trading above US$200 on most crypto exchanges. The protocol launched a yield farming program for its users looking to lock up their funds lured by the high returns.
But in just a matter of minutes, the team redeemed their token at once, causing a sharp price drop – leaving investors with almost no possibility of pulling their funds. The team quickly proceeded to delete its official telegram and twitter account, which is how a typical rug pull ends up.
Yet Another Rug Pull in the DeFi World
Rug pulls are exit scams that are becoming common in the DeFi space. Project developers run away with users’ funds by draining the liquidity pools once they reach a high amount, usually millions.
Developers usually swap stolen tokens for Monaro (XMR) to later swap those tokens again for another currency (usually Ethereum or USDT). Monaro transactions are hard to trace because they use ring signatures – a type of digital signature that can be performed by any member of a set of users that have a key.
This rug pull adds to the list of many that have occurred in the DeFi space, including TurtleDex, a Binance Smart Chain-based DeFi storage that drained US$2.5 million in Binance Coin (BNB) after its launch.
As reported by Crypto News Australia, a project that raised suspicions recently is ICP Coin – which dumped nearly 95 percent amid claims the development team might have deliberately caused it to drop from an ATH of almost US$750 in May, now trading at US$46.
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