Chibi Finance has been accused of leaving its token holders high and dry by executing a rug pull worth $1 million. As per reports, the Chibi Fiance team is allegedly nowhere to be found. According to reports, the DeFi project has run its liquidity pool dry, with 555 Ether (ETH) – worth $1 million in user deposits – vanishing into thin air.
In a tweet, blockchain security, and data analytics firm PeckShield claimed that Chibi Finance withdrew the staked tokens by first converting them into ETH and then routing them to the Ethereum network. This was done through the Tornado Clash, a crypto mixing service.
CHIBI token’s price falls by 98%
What’s more, is that the team has allegedly “disappeared” and all social media accounts on Telegram and Twitter belonging to Chibi Finance have been deleted. The platform’s official website also remains inaccessible.
Following the news of the alleged rug pull, the market price of the CHIBI token plummeted, losing almost 98% of its value. According to data from a leading coin tracker, the price of the token was hovering around $0.017 at the time of writing this report.
Chibi Finance’s “disappearing act” is the latest among the spate of rug pulls that have impacted the Ethereum and Arbitrum ecosystem. Earlier in April, zkSync project Merlin reportedly stole $2 million from its users. In May this year, another Abirtum-based platform Swaprun allegedly siphoned off around $3 million worth of user funds in another case of rug pull.
What is a rug pull?
A rug pull refers to a kind of crypto scam where developers or the team behind a DeFi project typically promotes a token on social media to gain legitimacy, create hype and raise money only to drain out the liquidity pool after the initial coin offering. The name “rug pull” is believed to be inspired by the English idiom “to pull the rug out” from under someone’s feet and leave them struggling for balance.
Chibi Finance: The backstory
Chibi Finance was rolled out recently as a Layer 1 blockchain powered by the Arbitrum network. Its aim was to remove challenges in the mass adoption of DeFi solutions. Its key USP was that it was a yield farming optimizer where users explore auto-compounded yield at regular intervals by pooling gas fees via the platform’s smart contracts. The Chibi Finance team had also released a native token called CHIBI which was the primary cryptocurrency of the network. In exchange for locking their tokens in the Chibi Finance vaults, the stakers would receive CHIB tokens as a reward.
Its lucrative rewards system appealed to crypto users as they didn’t have to worry about things like what is the best time of day to buy cryptocurrency or the new crypto coins hitting the market.
Another feature that drew a lot of users to Chibi Finance was its native emissions which were pitched as a reward for early backers of the project. With their native emissions, Chibi Finance had promised high annual percentage yield rates from its vaults for farms.
The latest incident of rug pull is yet another reminder for users why they should research cryptocurrency first rather than chasing unrealistic goals of how to make $100 a day with cryptocurrency.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
