Chibi Finance, an Arbitrum-based DeFi project, is being hit with allegations of rug pull after it disappeared with $1million worth of various tokens. The protocol had just gone live less than a day before.
The funds were swiftly laundered to other networks, which could have been possible through the deployment of a malicious contract. This allowed the developers to steal user funds from Chibi’s smart contracts.
The act is said to have drained its liquidity pool, compromising a total of 555 Ether (ETH). At the time of press, this accounted for $1m worth of user deposits.
Blockchain security and data analytics firm Peckshield deduced that the Chibi team withdrew staked tokens by converting them to ETH and then funnelling them to the Ethereum network via the crypto mixing service Tornado Cash. The service is infamously known for being used by crypto criminals to mask their transactional activity.
The Chibi Finance team then disappeared into thin air. Its social media accounts are inaccessible as both its Twitter profile and website were disabled and deleted after illicit activity.
Shortly after the event came to light, CHIBI tokens plummeted by almost 99% as per CoinGecko. The coin, which started trading at $1.36 on Monday, fell below zero shortly after. At the time of press, CHIBI’s price was hovering around $0.001.
Arbitrum seems to have become a breeding ground for rug pulls recently. It was just back in May when another project based on this called Swaprun vanished with close to $3m worth of user funds in a rug pull.