Kokomo Finance Allegedly Executed a $4M “Exit Scam”

Since the attack, the company has deleted all of its social media accounts.

Kokomo Finance, an Optimism-based lending protocol, is under suspicion for orchestrating a $4 million “exit scam.” The company has allegedly exploited a smart contract loophole to siphon users’ funds.

Kokomo Finance has operated as an open-source, non-custodial lending protocol on Optimism, allowing trades of wrapped Bitcoin (wBTC), Ether (ETH), Tether (USDT), USD Coin (USDC), and DAI.

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Blockchain security company CertiK warned the public about the potential “exit scam” in a tweet posted on March 26th, emphasizing the drastic 95% plunge in the value of the Kokomo Finance token (KOKO).

According to CertiK, the exploiter manipulated the smart contract code tied to a wrapped Bitcoin token, cBTC, by modifying the reward speed and deactivating the borrowing feature.

Afterward, an address starting with “0x5a2d…” granted permission to the revised cBTC smart contract to utilize over 7,000 Sonne Wrapped Bitcoin (So-WBTC).

The malicious actor subsequently executed another command allowing them to generate a $4 million profit. The attacker did so by swapping the So-WBTC to the 0x5a2d address.

CeritK claims that this “incident” is the largest they have come across on the Optimism blockchain.

Before the alleged “exit scam,” screenshots indicate that over $2 million had been locked in Kokomo Finance, which subsequently saw its value nosedive by more than 97%. Data from DefiLlama reveals that wrapped Bitcoin (wBTC) made up over 72% of the total value locked within the Kokomo Finance protocol.

Following the news about a possible scam, Kokomo Finance deleted all its social media accounts.

Gile K. - Crypto Analyst

by Gile K. – Crypto Analyst, BitDegree

Source: https://www.bitdegree.org/crypto/news/lending-protocol-kokomo-finance-vanishes-amid-4m-exit-scam-suspicions
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