Kokomo Finance Suspected of Conducting $4 Million Exit Scam via Smart Contract Loophole
Optimism-based lending protocol, Kokomo Finance, has come under suspicion of conducting an “exit scam” worth around $4 million. The alleged rug pull was brought to light by blockchain security firm CertiK, who alerted its followers to the incident via a tweet on March 26.
According to CertiK, the Kokomo Finance token (KOKO) fell by a staggering 95% in value within minutes, after the deployer of KOKO attacked the smart contract code of a wrapped Bitcoin token, cBTC. The attacker reportedly reset the reward speed and paused the borrow function before approving the new cBTC smart contract to spend over 7000 Sonne Wrapped Bitcoin (So-WBTC).
On 26 March 2023, Kokomo Finance conducted an exit scam and stole ~$4 million in user funds.
Details Below 👇 https://t.co/BEPwfahblz
— CertiK Alert (@CertiKAlert) March 26, 2023
The attacker then called another command to swap the So-WBTC to an address starting with “0x5a2d,” which resulted in a $4 million profit for the address. CertiK also highlighted that Kokomo Finance removed all its social media accounts immediately after the alleged scam took place.
Kokomo Finance is an open-source and noncustodial lending protocol on Optimism, where investors could trade wBTC, Ether (ETH), Tether (USDT), USD Coin (USDC), and Dai (DAI). The platform has not made any official statements on the alleged scam.
The incident raises concerns over the security of DeFi protocols, as several similar incidents have occurred in recent times. Rug pulls and exit scams have become commonplace in the DeFi space, leading to massive losses for investors.
The alleged scam also highlights the importance of conducting thorough research before investing in any DeFi project. Investors should evaluate the project’s credibility, security, and transparency before putting their money into it.
Overall, the alleged exit scam by Kokomo Finance is a reminder of the risks involved in investing in DeFi projects, and investors should always exercise caution and due diligence.
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