Kokomo’s Developers Steal $4M In Wrapped Bitcoin Via Cunning Exit Scam
- Kokomo Finance was accused of an exit scam, stealing $4 million in user funds.
- Kokomo launched on March 25, and offered trading, borrowing, and lending of various cryptocurrencies.
- Kokomo developers deployed a contract to falsely inflate liquidity, maliciously approved over $4 million transfer, and quickly deleted social media accounts and the Kokomo website.
Kokomo Finance, a lending protocol based on Optimism, has been in the news recently for all the wrong reasons.
Over the weekend, the developers behind the platform were accused of conducting an exit scam that involved manipulating tokens on the protocol to steal a whopping $4 million in user funds. This is a classic example of an exit scam, where developers or promoters of a crypto project market a seemingly legitimate project to investors, only to disappear once a large amount of money has been invested.
Kokomo Finance, which launched on March 25, was designed to allow users to trade, borrow, and lend a variety of cryptocurrencies, including wrapped bitcoin, ether, tether, USD Coin, and dai. The platform quickly gained popularity among Optimism users, thanks to its user-friendly interface and attractive features.
However, on Sunday night, Kokomo developers carried out an attack that left users reeling. They deployed a contract called cBTC from the main address of KOKO, Kokomo’s native tokens. They then set the reward speed, paused a borrow feature, and created a malicious contract to interact with the rest of the protocol. The security firm CertiK has confirmed that this was indeed an attack.
cBTC is a wrapped bitcoin derivative issued on the Ethereum network. The issuance of this 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, amounting to over $4 million.
To make matters worse, social media accounts and the Kokomo website were quickly deleted following the attack, making it impossible for users to access any information about the platform. This incident highlights the risks associated with investing in cryptocurrencies and the importance of conducting thorough due diligence before investing in any project.
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