The newly-launched ArbiSwap app appears to have rug pulled users after removing over $100,000 from the platform’s liquidity pools.
ArbiSwap’s native ARBI tokens fell from $1.5 to a fraction of a cent in the past 24 hours. Blockchain data shows the developers minted 1 billion fake tokens, swapping these for USD Coin (USDC) and then for nearly 69 ether (ETH).
This was possible as the rogue developers controlled the project’s liquidity pools. Liquidity pools refer to the token pairs held by smart contracts on decentralized exchanges, with developers initially seeding both sides of a token pair.
Blockchain data from DEXTools shows just $4 million in liquidity on ArbiSwap in European morning hours on Thursday. The service was launched in February and quickly grew to $4.4 million in total locked value (TVL).
ArbiSwap offered swapping of various cryptocurrencies for low fees on its platform and advertised giving back 100% of all generated revenue to holders of ARBI, which likely piqued the quick interest for ArbiSwap among users.
The move is a textbook rug pull, a scam carried out by developers who launch a working decentralized finance application and carry out social media marketing to popularize it before issuing a token and listing it on a decentralized exchange (DEX).
After investors have purchased the tokens in the hopes of a positive return, the developers shut up shop, remove liquidity and disappear.
CoinDesk was unable to reach ArbiSwap developers for comment. At the time of writing, the links on ArbiSwap’s website were not working.
