Crypto Lender Kokomo Finance Conducts $4M Exit Scam
- Blockchain security firm CertiK warned that the team behind Kokomo Finance have executed a rug pull on Sunday, and stolen around $4 million in user funds.
- The website and social media accounts of the Optimism-based crypto lender have all been deleted, while its KOKO native token fell by more than 98%.
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The team behind Optimism-based lending protocol Kokomo Finance appear to have executed a rug pull over the weekend, stealing around $4 million in funds, security firm CertiK said via Twitter on 27 March.
Launched on 25 March, Kokomo Finance was an open-source, non-custodial lending protocol on Optimism that allowed users to borrow, lend, and trade several major cryptocurrencies, including wrapped Bitcoin (wBTC), Ether (ETH), Tether (USDT), USD Coin (USDC), and Dai. The project quickly rose in popularity among Optimism users — and was even tracked by platforms like CoinGecko and DefiLlama — but on 26 March all of Kokomo Finance’s online presence was removed.
According to blockchain security firm CertiK, Kokomo’s developers deployed an attack contract cBTC from the main address of the KOKO native token on Sunday, and then resetted the reward speed and paused the borrow function. The cBTC contract was then given approval to spend 7010 Sonne wrapped Bitcoin (So-wBTC), which were transferred to address 0x5C8d and then swapped for 141 wBTC producing a $4 million profit.
Shortly after Kokomo’s social media accounts and website were deleted, the value of the KOKO token fell by more than 98%, wiping nearly all value for its holders.
- An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
- The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
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- Faruk Özer and his two siblings were sentenced to 11,196 years in prison for their involvement in the $2 billion rug pull of Turkish crypto exchange Thodex in 2021.
- Özer fled the country after the collapse of the exchange, but was detained in Albania a year later, and extradited back to Türkiye in April 2023 where he faced seven criminal charges.
- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.