In a significant development, three cryptocurrency projects mysteriously disappeared from the internet shortly after a blockchain investigator, known as ZachXBT, linked their liquidity provisions to funds previously stolen in various hacks. This incident underscores the ongoing challenges and risks in the cryptocurrency landscape, particularly concerning the security of project funds and the integrity of new crypto ventures.
Investigation and Exposure
On April 14, ZachXBT pinpointed a wallet address that was actively providing liquidity to three emerging crypto projects: Leaper Finance on the Blast network, Zebra DAO on Base, and Glori Finance on Arbitrum. These projects had modest followings on social media platforms like X, with Leaper Finance boasting 1,800 followers, Zebra DAO 3,200 followers, and Glori Finance similarly 3,200 followers.
- Source of Liquidity: A wallet previously involved in a rug pull project.
- Scope of Operations: The wallet provided funds across multiple blockchains including Base, Solana, Scroll, Optimism, Arbitrum, Ethereum, and Avalanche.
Following the exposure by ZachXBT on X, the implicated projects swiftly took down their websites and deactivated their social media accounts. Remarkably, an individual managing Leaper Finance’s social media acknowledged ZachXBT’s investigative prowess with a note that read: “Nice work! My comrades here at Lazarus fear you yet admire you!” This was shortly followed by an audacious proposal for a partnership in launching a new scam token.
- Deactivation of Online Presence: Rapid removal of websites and social media accounts associated with the projects.
- Public Acknowledgment: Admission of deceitful practices by the Leaper Finance account manager.
Broader Implications and Historical Context
ZachXBT’s findings suggest these projects were part of a larger scheme by scammers responsible for stealing millions from other crypto projects like Magnate Finance, Kokomo Finance, Lendora, and Solfire. This pattern of using stolen funds to create and sustain new scam projects poses significant risks to investors and undermines the integrity of the cryptocurrency ecosystem.
Given the prevalence of such fraudulent activities, potential investors are urged to exercise caution and conduct comprehensive due diligence before investing in any crypto projects. This includes verifying the background of the project founders, the legitimacy of their operations, and the authenticity of their audit reports.
- Background Checks: Investigate the history and credibility of project teams.
- Audit Verification: Confirm the validity and thoroughness of project audits.
- Awareness of Red Flags: Stay informed about common signs of fraudulent projects.
Rising Trends in Crypto Scams
The incident coincides with a notable increase in phishing scams, particularly on the Ethereum layer-2 protocol, Base. In March alone, Base saw an 18-fold increase in stolen funds due to phishing, totaling approximately $3.35 million, as reported by Scam Sniffer. This rise is occurring alongside a surge in memecoin popularity on the platform, which has contributed to a substantial increase in Base’s total value locked, now exceeding $3.2 billion—a 370% increase since the start of 2024.
- Increase in Phishing Attacks: Expected rise in phishing incidents as the user base and asset volume on Base grow.
- Memecoin Craze: Significant role of memecoins in attracting both legitimate investment and fraudulent activity.
The disappearance of these crypto projects after their dubious financial practices were exposed serves as a stark reminder of the volatile and sometimes murky world of cryptocurrency investments. As the market continues to evolve, maintaining vigilance and advocating for transparency and security will be crucial in protecting investors and fostering a healthier ecosystem.
