4 hours ago · 3 min read
Ethereum › DeFi
Ethereum token ‘WhaleFarm’ drops 99% in latest DeFi scam. Team steals $2 million
Another DeFi project turns out to be a costly trap for unsuspecting investors lured by unrealistically high APY.
Decentralized finance (DeFi) project WhaleFarm joins the fast-growing list of exit scams, hijacking millions as its native token’s value plummeted by almost 100% in minutes.
Recently, the project’s anonymous developers launched yield farming, a staking opportunity for investors to lock up their crypto in return for high rewards.
The project witnessed growth as its native coin WhaleFarm Token surged in value, trading for $215 before the intentional capitulation occurred.
The malicious maneuver occurred in minutes, as the scammers redeemed their token all at once, causing its price to plummet and leaving investors with no time to pull out.
Meanwhile, WhaleFarm deleted the project’s Twitter account and the official Telegram group, pointing to a typical rug pull.
A popular crypto commentator stated the most obvious about the project, pointing to it being a booby trap for unsuspecting investors that eventually cost them more than $2.3 million.
WhaleFarm Token is the most recent scam to pull the rug on investors. It's estimated they stole over $2.3 million.
– Fully anonymous team
– Promised 7.2 million % in returns
– The token is now down -99.99%
– Twitter page deactivated
– Telegram group deleted pic.twitter.com/Ye6CZ9HgUt
— Mr. Whale (@CryptoWhale) June 30, 2021
While offering numerous staking options, including Bitcoin (BTC), Ethereum (ETH), Binance USD (BUSD), Binance Coin (BNB), Tether (USDTusdt), Chainlink (LINK), Cardano (ADA) and Polkadot (DOT), the project promised to earn up to unrealistically high 7,217,848% annual percentage yield (APY).
These types of exit scams mainly happen in the decentralized finance (DeFi) ecosystem and largely on decentralized exchanges (DEXs), where malicious individuals acting as developers list tokens and pair them with leading cryptocurrencies.
This is typically followed by an artificially created hype on social media platforms, as scammers often inject a significant enough amount of liquidity into their pool to cultivate an investor base and build trust in the project.
Eventually, once a significant amount of investment enters the pool the scammers abandon the project and exit with the proceeds as they rapidly sell their native token and deplete the liquidity pool.
Unlike centralized cryptocurrency exchanges, so-called rug pulls thrive on decentralized exchanges (DEXs) since they allow users to list tokens for free and without audit.
Creating tokens on open-source blockchain protocols is fairly easy and free and con artists taking advantage of this is not a novelty.
However, alongside accelerated exposure and growing interest in crypto, the rate of scams also keeps advancing.