Kannagi Finance on zkSync Era: $2.13 Million Rug Pulled in Devastating Scam
Kannagi Finance, the revenue aggregator protocol powered by zkSync, has been subjected to a “rug pull,” leaving investors devastated and facing significant financial losses. According to blockchain analytics firm WuBlockchain, the platform’s official website has expired, and the Total Value Locked (TVL) has plummeted from $2.13 million to nearly zero, resulting in an estimated user loss of $2.13 million.
The zkSync Era revenue aggregator protocol Kannagi Finance has RugPulled, and its official website have expired.
The TVL of Kannagi Finance was $2.13 million yesterday, and the current TVL has almost returned to zero, so the estimated user loss is $2.13m. The Kannagi Finance…
— Wu Blockchain (@WuBlockchain) July 29, 2023
The first signs of trouble emerged when Twitter user @huang_yenwen, a vigilant crypto enthusiast, discovered discrepancies in Kannagi Finance’s smart contract code after utilizing Cyberscan to conduct an audit. He revealed that the code had been altered, a concerning red flag for investors. Despite raising concerns, @huang_yenwen acknowledged that such issues are not uncommon for new projects in the crypto space, inadvertently downplaying the severity of the situation.
Adding to the suspicion surrounding the project is the fact that the Kannagi Finance contract code was not open source verified. This lack of transparency raises questions about the platform’s intentions and casts doubts on the credibility of its development team. Furthermore, vital information regarding the project’s founders and team members remains conspicuously absent, leading to concerns of an orchestrated exit scam.
Kannagi Finance had purportedly undergone an audit by SolidProof on June 6. SolidProof is associated with German company Make Network and is known to have partnered with reputable entities such as PinkSale, BitMart, UNCX Network, among others. However, the rug pull incident has raised doubts about the efficacy and thoroughness of the audit process.
As a result of the rug pull, the project’s native token, KANA, suffered a significant decline in value. Within the past 24 hours, KANA lost over 99% of its value, currently trading at $0.000076 USD. Trading volume has also stagnated at $11k, indicating the loss of investor confidence and trading activity.
Rug pulls have become an all-too-common occurrence in the cryptocurrency market, wreaking havoc on unsuspecting investors. This fraudulent tactic involves developers suddenly abandoning a project or siphoning off all the liquidity from the assets, leaving investors with worthless tokens. The lack of regulatory oversight and the decentralized nature of cryptocurrencies make rug pulls difficult to prevent, highlighting the need for greater due diligence and caution among investors.
Unfortunately, Kannagi Finance is not an isolated case. Earlier in the month, another project named Multichain faced similar accusations of a rug pull when substantial amounts of funds were transferred to unidentified wallet addresses, sparking fears among investors.
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