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Only a day after it went live on the Binance Smart Chain (BSC), the Meerkat Finance DeFi project was drained of almost $32 million worth of crypto assets.

According to the project’s official Telegram channel, the loss of funds was caused by an unknown attacker, who was able to “hack” their systems earlier today, and drain 13.96 million BUSD and 73,635 BNB — with a combined worth of around $32 million — from their smart contract vault. Many within the community, however, think this was in fact a “rug pull” staged by the team behind Meerkat Finance, with on-chain data supporting their claim.

The data shows the alleged hacker was able to alter Meerkat’s smart contract, which contained the vault’s business logic, using the original deployer’s account, suggesting that either its private key was compromised, or that this was the main goal of the project all along. Another interesting occurrence — that is very similar to previous “rug pulls” — is that the project’s website has been unreachable since the incident happened, in addition to its Twitter account being deleted.

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Binance has already started to investigate the alleged hack, and has prompted the community to provide any additional information on the case. If the community’s suspicions are confirmed, this will be the first major “rug pull” that took place on the Binance Smart Chain.

While not on the scale of Meerkat Finance, the Binance Smart Chain had already experienced an exit scam in October 2020. Automated market maker Wine Swap was able to raise around $345,000 worth of crypto within an hour of its launch, which were promptly transferred to its creator’s personal address. Through the hard work of its security team, Binance was able to recover around 99.9% of the stolen funds by following his transactions through on-chain analysis tools.

It comes as a no surprise that the Binance Smart Chain will be the target of such malicious actors, considering its raising popularity over the past months. Many DeFi projects, such as Alpha Homora, have started moving to the Binance Smart Chain in light of the ever increasing gas fees on Ethereum.

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Kenny Bui

Why people can believe in a smart contract running on a centralized blockchain like BSC.