Ethereum L2 Lending Project Magnate Finance Takes Off with $6.5M in Rugpull
In Brief
Magnate Finance, an Ethereum Layer-2 lending project built on Base, has made off with $6.5 million in a rugpull.
On-chain sleuth ZachXBT first alerted the community of an imminent rugpull after seeing a sudden massive spike in Magnate Finance’s total value locked (TVL), potentially indicating smart contract manipulation.
Magnate Finance has now deleted all of its social media presence and communication channels.
Magnate Finance, an Ethereum Layer-2 lending project built on Base, has performed a rugpull, taking off with $6.5 million, according to blockchain security company Peckshield.
ZachXBT, a well-known on-chain sleuth, first posted a community alert on X (Twitter) regarding a possible upcoming rugpull.
This was prompted by his observation of a sudden massive spike in the total value locked (TVL) of Magnate Finance. The surge potentially indicated smart contract manipulation on the platform.
ZachXBT indicated a direct connection between the deployer’s address and the Solfire exit scam, involving $4.8 million.
This exit scam was subsequently verified by Peckshield, which noticed a sharp TVL drop of $6.4 million in Magnate Finance.
Peckshield’s investigation revealed that the project’s developer had directly manipulated the price oracle provider and liquidated all assets. The individual behind the scam then moved roughly 1.34 million $DAI to a new address and bridged around $1 million of the stolen funds to the BNBChain.
Subsequently, Magnate Finance deleted all of its social media and web presence as well as communication channels such as Telegram group. Prior to removing its web presence, Magnate Finance changed its X (Twitter) bio alleging that ZachXBT had breached the platform’s smart contract.
Additionally, the lending project attempted to insinuate the existence of an agreement where both parties would evenly divide the stolen funds.
ZachXBT suspects potential on-chain connections between the lending project and the Kokomo Finance exit scam.
In March, lending protocol Kokomo Finance — operating on the Optimism network, conducted an exit scam, making off with $4 million in user funds. Following a strategy akin to that of Magnate Finance, Kokomo promptly removed its website and vanished from social media platforms after perpetrating the scam.
Base, an Ethereum Layer 2 (L2) platform nurtured by Coinbase and constructed upon the open-source OP stack, faced setbacks amid recent vulnerabilities. On August 1st, the network’s premier decentralized exchange (DEX) LeetSwap fell victim to an exploit that affected its liquidity pools.
Crypto lending protocols have similarly taken a blow. For instance, crypto lending protocol Exactly recently lost over $12 million worth of ETH following a bridge exploit.
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About The Author
Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via cindy@mpost.io with press pitches, announcements and interview opportunities.
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Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via cindy@mpost.io with press pitches, announcements and interview opportunities.
