A decentralized finance (DeFi) project on Arbitrum stole over $1 million in users’ funds. The team deleted their social media accounts and the official website. Hence, the community suspects a rug pull.

Investors seek quick returns by putting money into new projects, but various risks are involved with this approach. Some projects might lose the users’ funds to hacks due to security vulnerabilities in their smart contracts, while others might conduct rug pulls.

The blockchain security firm PeckShield reported that Chibi Finance stole over $1 million worth of users’ crypto. The developers conducted a rug pull by swapping the funds to 555 Ethereum (ETH) and bridging them from Arbitrum to the Ethereum chain.

Later the developers used Tornado Cash to funnel away the funds. They have also abandoned their social media presence, making it more difficult for the community to reach out and question them.

Such incidents when the core team of projects steals users’ funds and disables their online presence are called a rug pull.

Read our detailed guide on Arbitrum here.

Due to the rug pull, the native token of Chibi Finance, CHIBI, plummeted by over 99% on Tuesday.

A crypto influencer, “Defi_Mochi,” has been facing community backlash for writing a thread sponsored by Chibi Finance. The community claims the influencer received $2,000 in ETH for promoting the project.

However, the Twitter influencer did mention that he was writing a sponsored thread on June 20. After the reports of the rug pull, the influencer deleted their thread.

Although the community’s favorite influencers might promote projects, it is mainly the investors’ responsibility to do detailed research before investing their funds.

Investors might often make hasty decisions, and hence they are becoming frequent victims of rug pulls. BeInCrypto reported that users lost over $45 million to rug pulls last month.

One of the biggest contributors to the total stolen funds was the Morgan DF Fintoch project which stole over $32 million. It is worth mentioning that the project put an actor’s photo as the CEO on the official website. With some due diligence, the investors might have discovered this red flag.

Got something to say about the Chibi Finance rug pull or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or Twitter.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

The post Rug Pull: Chibi Finance Users Lose Over $1M Worth of Crypto appeared first on BeInCrypto.

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