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Arbitrum-Based DeFi Project Chibi Finance Disappears With a Million Dollars

Tim Fries

Published: June 27, 2023 10:11 pm

Creators of the decentralized finance (DeFi) project Chibi Finance disappeared overnight after reportedly stealing over $1 million in user funds. The developers reportedly seized different crypto tokens from Chibi smart contracts and converted them to 555 ether (ETH).

Chibi Developers Disappear with 555 Ether

The developer team behind Chibi Finance, a DeFi project built on the Arbitrum blockchain, has reportedly vanished after stealing more than $1 million worth of several digital tokens in what appears to be another ‘rug pull’ in the decentralized finance space. The move comes just hours after Chibi launched.

The rug pull was made possible after Chibi developers deployed a malicious contract that enabled them to seize investor funds from the project’s smart contracts, according to blockchain security firm CertiK. This is the 12th exit scam that occurred on Arbitrum in 2023, CertiK added.

On-chain data showed that roughly 555 ether, or $1 million, was taken from Chibi’s liquidity pools. More specifically, developers stole various crypto tokens staked by users and converted them to ETH. Then, the assets were transferred from the Arbitrum chain to Ethereum and routed via Tornado Cash – a controversial crypto mixer commonly used by hackers.

The digital presence of Chibi’s team disappeared in a matter of hours, with its social media accounts and the official website no longer accessible. CHIBI’s token price plunged 98% following the incident.

Losses From Rug Pulls Were Higher Than Those Related to DeFi Hacks in May

‘Rug pulls‘ refer to deceptive practices in the crypto space where the creators of a project abruptly abandon it stealing funds, and leaving investors with worthless or significantly devalued tokens. It involves intentionally misleading investors by promoting false promises or misleading information about the project’s potential, only to exit the market once a substantial amount of funds have been collected.

Recent reports showed that losses stemming from crypto rug pull and exit scams have exceeded those that resulted from DeFi hacks in May. In particular, six rug pulls in May led to more than $45 million in combined losses, compared to $19.7 million stolen in DeFi hacks last month.

This represents a major trend shift, given that DeFi accounted for 80% of all crypto hacks in 2022. To address rug pull risks, blockchain security firm Beosin said that crypto users must increase their anti-fraud awareness and carry out due diligence before investing in a project.

This article originally appeared on The Tokenist