ArbiSwap DEX on Arbitrum Accused of “Rug Pull” Users

On March 2nd, the decentralized exchange (DEX) ArbiSwap, running on Arbitrum, was accused of a “rug pull” by users, leaving them with losses as the developers vanished with their funds. The incident occurred when the DEX minted around 1 billion ARBI tokens and swapped them for USDC, causing the value of ARBI in the USDC/ARBI pair to drop significantly.

The developers then conducted a price manipulation transaction in the next block, swapping USDC back to ARBI, which was subsequently converted to ETH and resulted in a profit of about 69 ETH, worth over $100,000 USD. As a result of this incident, the price of ARBI dropped from $1.5 to near-zero.

ArbiSwap is a newly launched DEX on Arbitrum, providing a range of cryptocurrency swapping services. The platform caught attention by claiming to allocate all swap fees to ARBI holders.

This case is a typical example of a “rug pull,” where developers artificially inflate the price of a token, then sell it off for profit, leaving users with worthless tokens. Developers of DeFi projects typically launch an application, issue tokens, and promote them to build trust and attract buyers. Once they have enough users and capital invested, they eliminate liquidity, shut down the platform, and vanish with the funds.

Investors should exercise caution when investing in DeFi projects, particularly newly launched ones that lack a track record. Additionally, it’s always essential to conduct research on the developers and their history in the crypto space before investing in any project.

The “rug pull” incident serves as a stark reminder of the inherent risks associated with investing in DeFi projects. As DeFi continues to grow in popularity, investors must remain vigilant and cautious to avoid falling prey to similar scams in the future.

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