Magnate Finance: The Latest Rug Pull on Layer-2 Base
Security firm PeckShield has reported an exit scam by Magnate Finance, a lending project on the layer-2 network Base, resulting in a loss of $6.4 million.
Magnate Finance's Rug Pull:
- Event Details: On the afternoon of 25/08/2023, Magnate Finance executed an exit scam, siphoning approximately $6.4 million. PeckShield described this event as a "rug pull," where the development team either abandons the project or withdraws all liquidity, effectively draining users' funds. The project reportedly manipulated its oracle to extract the funds.
🚨🚨🚨The @MagnateFi just performed a rugpull (w/ ~$6.5m loss) by directly manipulating the price oracle.
— PeckShield Inc. (@peckshield) August 25, 2023
Here is the related hack tx: https://t.co/vjFFSNY27W https://t.co/APJjRZAsCK pic.twitter.com/CHhxGqul83
Immediate Aftermath:
- Information Wiped: The Magnate Finance team erased all their online presence, including social media accounts on Twitter and Telegram, and their official website became inaccessible.
- On-Chain Links: On-chain detective ZachXBT identified that the project's smart contract deployment wallet is linked to Solfire, a Solana project that scammed users for $4.8 million in 2022.
Community Alert: Magnate Finance on Base will likely exit scam in the near future currently with over $6.4M TVL.
— ZachXBT (@zachxbt) August 25, 2023
The deployers address is directly linked to the Solfire $4.8M exit scam. pic.twitter.com/mBDUy3D66j
Impact on the Market:
- Token Crash: The token MAG of Magnate Finance plummeted by over 90% following the news of the rug pull. Prior to this event, Magnate Finance was among the top 3 lending projects on Base, boasting a TVL of $6.4 million, just behind Compound and Moonwell.
Base: A New Target for Low-Quality Projects:
- Platform Overview: Base, developed by Coinbase and launched in February 2023, opened its mainnet to developers in mid-July 2023 and to global users on 09/08/2023. The platform quickly attracted a significant user base, with its TVL surpassing $114 million on 07/08 and jumping to $145 million after the mainnet launch.
- Rising Scams: Unfortunately, Base has become a hotbed for fraudulent projects, with several incidents in the past month:
- RocketSwap: On 15/08/2023, RocketSwap was compromised, leading to a 55% drop in the RCKT token within 24 hours.
- LeetSwap: On 01/08/2023, LeetSwap, a leading DEX on Base, was exploited, with attackers withdrawing 340 ETH, approximately $630,000.
- BALD Token: On the evening of 31/07/2023, the BALD/WETH liquidity pool was drained, causing the token price to drop by over 80%.
This incident with Magnate Finance highlights the ongoing challenges and risks within the DeFi space, particularly on emerging platforms like Base. Users and investors must remain vigilant and conduct thorough due diligence when engaging with new projects.
