Scammers Target DeFi: There’s always the risk of falling victim to crypto scams

Scammers Target DeFi: In the fast-paced world of cryptocurrencies, where anonymity and decentralization reign supreme, there’s always the risk of falling victim to scams and fraudulent activities. Just recently, a coalition of scammers that would back a brand new fraud scheme was warned by the pseudonymous blockchain investigator ZachXBT, who said this could risk millions of dollars, reported by CoinTelegraph.

In a thread on X, ZachXBT shared his findings on research into Leaper Finance, a lending protocol built on Blast, and he discovered that the lending protocol of Leaper Finance sheds light on the bad activities of the group. ZachXBT, in his analysis, explained that the known influence group is always rug-pulling, where developers run away from a project and hence easily get away with users’ money. To this list, they add Magnate ($6.5 million), Kokomo ($4 million), Solfire ($4.8 million), and Lendora, adding to the list of unsuspecting investors left in financial ruin.

What’s particularly concerning is the modus operandi of the group. However, they are characterized by allowing the total value locked (TVL) of their protocols to grow substantially before actually using the rug pull, leaving the investors at huge losses. Further, the group is known to forge the know-your-customer (KYC) documentation and uses low-grade audit firms to create an impression of being legit.

But the scope of their fraudulent activities doesn’t end there.

As ZachXBT said, now they work over other blockchain networks, which include Base, Solana, Scroll, Optimism, Arbitrum, Ethereum, and Avalanche, among many others. This wide operation has led to estimated losses above $20 million, which the fraudsters are inflicting on victims. Further, the group running Leaper Finance, which has such enormous funding from the proceeds of their previous scams to the tune of nearly a million dollars through an address on the Blast network, fuels these activities, thus making it even harder for them to be traced and recovered.

While efforts were made to determine what they were up to, the group certainly was not timid to be provocative. When ZachXBT embarked on his exploration, he started bullying the researcher and even showed his audacious and high level of contempt for the result of his actions when he declared a “token launch”. The mere mention of Lazarus, a well-known North Korean hacking outfit, further muddies the waters with an air of added menace, hinting at its possible links to sophisticated cybercrime syndicates.

Further investigation has revealed that the Leaper Finance and Glori Finance accounts at X have been deactivated and the websites of these projects are down. However, the threat from such scammers was very much there, and hence needs to have proper vigilance and due diligence while dealing with cryptocurrencies. Investors need to exercise caution and due diligence in all cases not to fall prey to unrealistic returns on their money or a lack of transparency in any scheme. In a nutshell, it will be to remind the public of the warning, sharply reminding them about the danger of investing in such coins, especially in an environment full of scams. The more information is out there, and you are informed, the more cautious you are in case of any eventualities, and if this goes hand-in-hand with the regulators and the law enforcement agencies, we make it better and build a safer, trustful ecosystem for everybody.