The team behind Chibi Finance, which was built on the Arbitrum blockchain, vanished after perpetrating what appears to be another instance of a “rug pull” within the decentralized finance space. The incident occurred shortly after Chibi’s launch.
Chibi Rug Pull
The rug pull was facilitated by the Chibi developers deploying a malicious contract that allowed them to seize investors’ funds from the project’s smart contracts, as reported by CertiK, a blockchain security firm. According to CertiK, this marks the twelfth exit scam on the Arbitrum platform in 2023.
Losses resulting from rug pulls have now surpassed those associated with DeFi hacks that took place in May. Rug pulls refer to deceptive practices in the cryptocurrency space where project creators abandon their undertaking abruptly, absconding with funds and leaving investors with worthless or significantly devalued tokens.
These creators intentionally mislead investors by making false promises or providing misleading information about the project’s potential, only to exit the market once a substantial amount of funds have been amassed.
Rug Pulls And Scams in May 2023
Recent reports indicate that rug pulls and exit scams in May led to combined losses exceeding $45 million, whereas DeFi hacks during the same period accounted for $19.7 million in stolen funds. This marks a significant shift in the trend, as DeFi hacks constituted 80% of all cryptocurrency hacks in 2022. In response to the risks associated with rug pulls, Beosin, a blockchain security firm, emphasized the need for crypto users to enhance their awareness of fraud and conduct thorough due diligence before investing in any project.
