Kokomo Finance, a lending platform based on the Optimism protocol, has been accused of an “exit scam” worth $4 million. The platform’s developers allegedly withdrew customer funds from the platform by exploiting a vulnerability in the smart contracts used by the platform just two days after the project was released.
CertiK, a blockchain security firm, noticed and announced this development on Twitter on March 26, 2023. The security firm warned its followers of the “exit fraud” reportedly committed by Kokomo Finance. The value of the Kokomo Finance (KOKO) token plunged by 95% within minutes of the scam being conducted, according to their tweet.
We are seeing a price #slippage on project Kokomo Finance (KOKO)
Contract eth:0x7Da25Bc4cFAed3F29414C6779676e53B19a356f5
which has dropped more than 95%.
The project has removed all of their social media accounts.
Stay vigilant! pic.twitter.com/eG84xQVJ4N
— CertiK Alert (@CertiKAlert) March 26, 2023
CertiK also pointed out that Kokomo Finance quickly deleted all of its social media accounts after the alleged rug pull. A quick look at the lending platform’s Twitter account and the links to their other social media pages confirm CertiK’s claims. All of them lead to an error page.
The project developers created a contract (a set of rules) called cBTC designed to perpetuate a scam. They paused a part of the project that let people borrow cryptocurrency and made the project use the bad cBTC contract instead of a good one. They also set up a way to reward people for using the bad contract.
Users and investors were left in a panic, trying to comprehend the situation and protect their interests. As a result, much of the token’s market value was erased, dropping its price from a steady $0.39 per token to just $0.01.
今天给大家分享一个很可怕的故事。有个叫上了optimism的借贷平台，叫kokomo finance，这两天刚上了coingecko，还得到0xguard的审计通过，正常买卖没有税费，有dis有推有电报，社区互动频繁回复及时，看起来没有什么问题。 pic.twitter.com/cFhgTDd4G8
— 進擊の烤麵筋 (@GeminiOU) March 26, 2023
Kokomo Finance is a lending protocol on the Optimism network that operates on an open-source, non-custodial basis. It allows traders to exchange cryptocurrencies such as wBTC, ETH, Tether, USD Coin, and DAI. Immediately after its launch on Optimism, Kokomo Finance was tracked by blockchain data services such as CoinGecko and DefiLlama. As a result, Kokomo Finance rose in the rankings.
Kokomo Finance was built by a team of five individual developers whose identities are shrouded in mystery and unknown to the public.
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