The founders are suspected of running a scam scheme Rug Pull

​Arbitrum-based ArbiSwap token collapses by 99,9%

02.03.2023 - 16:20

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4 min

What’s new? On March 2, the value of ARBI, the native token of the ArbiSwap decentralized exchange (DEX) based on the Arbitrum blockchain, plummeted by 99,9%, from $1,5 to $0,00000001223. More than $136 000 was withdrawn from the liquidity pools. In this, less than 24 hours before the withdrawal, representatives of the project urged users to invest in the staking of ARBI, promising 1330% p.a. with payments in bitcoins, Ethereum, and USDC stablecoins. Representatives of the crypto community accused the exchange’s team of scamming using the Rug Pull scheme.

Rug Pull is a type of scam in which project developers, after having raised enough money through the PR of a roadmap, which implies sustainable development, delete social media, take investments, and leave the project without support, leaving investors with devalued tokens.

What else is known? Analysis of blockchain data shows that the developers issued 1 billion fake tokens, exchanging them first for USDC and then for 84 ETH (~$136 660). The scam was made possible because they controlled the project’s liquidity pools.

According to cybersecurity company PeckShield, the scammers subsequently transferred Ethereum coins to the Tornado Cash crypto mixer.

ArbiSwap was launched in February 2023, with the total value locked (TVL) in the protocol reaching $4,4 million as of the morning of March 2, according to DeFiLlama. ArbiSwap offered the exchange of cryptocurrencies with low fees and refunds of 100% of all proceeds to ARBI token holders, which likely contributed to the project’s rapid rise in popularity.

CoinDesk could not reach the developers of ArbiSwap for comment, and the team did not make any statements on social media either.

At the end of December, the Rug Pull scheme was used by the developers of the Clifforf Inu project, after which the CLIFF rate plummeted by 98%. In July, the creators of the Teddy Doge token implemented the same scheme, stealing $4,5 million from investors. In August, the token of the blockchain game Dragoma collapsed by 99% due to asset theft, with PeckShield analysts suggesting that the project’s developers were behind the withdrawal. In the same month, the creators of the SudoRare protocol used the Rug Pull scheme. They withdrew $845 000 in cryptocurrency from the project.

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