TurtleDex, a Binance Smart Chain (BSC) file storage project, pulled a “rugpull” exit scam yesterday, March 19. A “rugpull” exit scam happens when a project’s creators drain the liquidity or deposited funds invested by the protocol.
According to TurtleDex team wallet transactions, the team drained funds from trading pools on BSC-native decentralized exchanges Pancake Swap and Ape Swap, transferred the liquidity to ETH, and sent the funds to Binance exchange wallets to be exchanged, following a March 15 presale round that collected 9000 BNB tokens worth approximately $2.5 million.
Not the First BSC Rugpull
On the Binance Smart Chain, this has occurred before. Since Meerkat Finance’s website and social networking sites blacked out earlier this month, $31 million was siphoned out of its vaults in what was allegedly a hacker attempt, but several investors suspect it was a rugpull.
The funds were then returned to Meerkat’s developers. A Meerkat developer identified as “Jamboo” said the entire thing was a “test” in a recently founded Telegram community named “Meerkatrefunds,” but how much of a “test” it remained unclear.
The Binance Smart Chain is a semi-closed ecosystem, which means Binance controls the Smart Chain’s multiple entry and exit points. This makes it incredibly challenging to remove funds from the Smart Chain without going through Binance’s central control. It’s entirely possible that Binance intervened.
Attention – The Turtledex (#TTDX) team has exit scammed.
We are just as shocked as everyone to see this unfold.
— Jet Fuel BSC ✈️ (@Jetfuelfinance) March 19, 2021
On Twitter, Jet Fuel Finance, a yield vault protocol that had collaborated with TurtleDex on a farming project, reported the rugpull, claiming they were “shocked” by the scam.
The TurtleDex website has been taken down, and the social media networks have been removed.
Any investors found out that the project had already been audited and that no serious security vulnerabilities had been discovered, raising fresh questions regarding audit effectiveness.
What Will Binance Do?
Both eyes are on Binance to help investors from losing money. So far, no word, but a tweet from company president CZ earlier this week explained, “We actually helped with a few rug pulls recently too.”
DeFi fans have received some bad news this month. After finding a bug that enabled them to generate counterfeit tokens and use them in combination with flash loans (smart contracts that provide loans in a single transaction) to collect real tokens, hackers stole $3.8 million from DeFi platform Dodo on March 9.
These attacks show that investing in the rapidly rising DeFi space is indeed a dangerous proposition.