The Arbitrum-based DeFi protocol Chibi Finance experienced a devastating breach as developers allegedly stole over $1 million in tokens soon after its launch. Security firm CertiK revealed that the developers deployed a malicious contract, allowing them to siphon funds from Chibi’s smart contracts. As a result, the value of CHIBI tokens plummeted by 98% in the aftermath of the incident, showcasing the severe impact of the rug pull on investors.
The term “rug pull” refers to a type of crypto scam where developers deceive investors by initially gaining credibility and raising funds, only to drain liquidity by pulling out abruptly. In this case, Chibi Finance presented itself as a yield-optimizing service, enticing users to deposit tokens in exchange for rewards. However, the rug pull underscored the risks associated with investing in nascent DeFi projects, highlighting the importance of thorough due diligence.
Following the rug pull, the stolen tokens were swiftly sold for 555 ether (ETH) and laundered through the mixing service Tornado Cash to obfuscate their trail. In response to the breach, Chibi Finance’s Twitter profile and website were promptly disabled and deleted, erasing any traces of the project. Additionally, some Crypto Twitter influencers who had promoted Chibi Finance removed their endorsements amid community backlash, illustrating the fallout from the rug pull on both investors and the broader crypto ecosystem.
