How Exit Scams Work (+ The Latest Example)

Article source, here.

TL;DR

• Over the weekend, developers of the lending platform, Kokomo Finance, conducted an 'exit scam,' stealing roughly $4 million in users' funds.

• On Sunday, the Kokomo developers paused the borrow feature, changed the reward speed, and created a contract that would allow their account to be paid out almost instantly.

• Once transferred, the tokens were all swapped from the native token of KOKO causing the token value to plummet 97% wiping almost all value from the project.

Full Story

Alright, time to review another scam.

Not to give it any more publicity than it deserves (it deserves none), but to make sure we all understand how they work.

Let's dive in.

Over the weekend, developers of the lending platform, Kokomo Finance, conducted an 'exit scam,' stealing roughly $4 million in users' funds.

The platform seemed perfectly legitimate. It had a nice easy-to-use interface, and it seemed as if you could trade, borrow and lend Wrapped Bitcoin (WBTC), ETH, USDT, USDC and DAI.

But that's exactly what the scammers wanted you to think.

On Sunday, the Kokomo developers paused the borrow feature, changed the reward speed, and created a contract that would allow their account to be paid out almost instantly.

Another malicious developer address was then used to approve a transfer that was higher than the allowed maximum.

Once transferred, the tokens were all swapped from the native token of KOKO causing the token value to plummet 97% wiping almost all value from the project.

Will this be the last time an exit scam happens in the crypto space? No.

Do we tell you this to scare you? Not entirely.

Should you research projects thoroughly before jumping in? Absolutely!

At least now you know.