The developers behind Kokomo Finance, a lending protocol based on Optimism, are accused of conducting an exit scam that resulted in the theft of $4 million in user funds. An exit scam typically involves marketing a legitimate-looking crypto project to investors, only to pull liquidity and erase all online and offline presence once a sizable amount of money has been attracted.
Introduction: Kokomo Finance Accused of Conducting Exit Scam
Kokomo Finance, launched on March 25, allowed users to trade, borrow and lend various cryptocurrencies, including wrapped bitcoin, ether, tether, USD Coin, and dai. The platform quickly gained popularity among Optimism users due to its user-friendly interface and attractive features.
However, on Sunday night, Kokomo developers deployed an attacking contract called cBTC from the primary address of KOKO, Kokomo’s native tokens. They then set the reward speed, paused a borrowed feature, and created a malicious contract to interact with the rest of the protocol. The security firm CertiK confirmed that this was indeed an attack.
The issuance of cBTC, a wrapped bitcoin derivative issued on the Ethereum network, was ultimately used to trick the protocol into falsely believing it had more liquidity when there was none. Another developer address was then used to maliciously approve a transfer of spending over 7000 Sonne Wrapped Bitcoin, another bitcoin derivative token on Ethereum. These tokens were then used to swap all user-supplied liquidity to Kokomo, resulting in over $4 million in theft.
The Aftermath of the Attack
In the aftermath of the attack, social media accounts and the Kokomo website were quickly deleted, making it impossible for users to access any information about the platform. As a result, this incident highlights the risks associated with investing in cryptocurrencies and the importance of conducting thorough due diligence before investing in any project.
The crypto market has seen a growing number of attacks and exploits. This latest exit scam from Kokomo Finance is another reminder that users must be vigilant and cautious when investing their funds. It’s essential to be aware of the risks and always exercise caution.
In conclusion, the Kokomo Finance exit scam is a stark reminder of the risks of investing in cryptocurrencies. The theft of $4 million in user funds has left many investors reeling, and deleting the platform’s social media accounts and website only adds insult to injury. Investors must conduct thorough due diligence before investing in any project and be aware of cryptocurrency risks.