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<p class="is-style-lead">A new lending protocol on Arbitrum’s network may be a scam platform, says on-chain investigator ZachXBT.</p>
<p>Crypto sleuth ZachXBT has called out newly launched defi lender Sorta Finance as a possible exit scam, and part of a criminal group stealing funds across blockchains. According to ZachXBT, the Arbitrum-based protocol bears the same <a href="https://x.com/zachxbt/status/1816443881447440789" target="_blank" rel="noopener noreferrer nofollow">signature</a> as past rug pulls like Magnate Finance, Solfire, and HashDAO.</p>
<p>The modus operandi usually involved forking Compound’s lending smart contract on Ethereum Virtual Machine-compatible chains. Malicious developers would then pause the protocol and withdraw user deposits from the total value locked.&nbsp;</p>
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   <p lang="en" dir="ltr">Community Alert: <a href="https://twitter.com/Sorta_Finance?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">@Sorta_Finance</a> is likely to exit scam on Arbitrum in the future so do not use the protocol.<br><br>This scammer has previously stolen $25M+ with scams such as Magnate, Kokomo, Lendora, Solfire, Crolend, HashDAO, etc<br><br>The deployer was newly funded and the first address… <a href="https://t.co/JsHGawtQyX" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/JsHGawtQyX</a></p>— ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1816443881447440789?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">July 25, 2024</a>
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<p>You might also like: <a href="https://crypto.news/why-the-u-s-doesnt-need-a-tax-on-mining-senator-lummis-explains/" rel="noopener noreferrer nofollow"> Why the U.S. doesn’t need a tax on mining: Senator Lummis explains </a></p>
<p>ZachXBT said the bad actors gained legitimacy on EVM chains and accrued TVL by tapping shady audit firms. Low-tier crypto influencers were also paid to promote the platforms. The crypto-native term for this is a process called “shilling.”&nbsp;</p>
<p>Furthermore, the crypto investigator noted that a Tornado Cash withdrawal funded an early Sorta Finance user. Tornado Cash is a U.S.-sanctioned <a href="https://crypto.news/are-the-tornado-cash-developers-guilty/" rel="noopener noreferrer nofollow">crypto mixer</a> used to obfuscate transactions.&nbsp;Lawmakers have frequently noted that criminals use the tool to hide where funds originated from.&nbsp;</p>
<p>As of July 25, Sorta Finance had less than $100,000 in TVL. But ZachXBT stressed that similar protocols seemingly masterminded by the same person led to millions of deposits.&nbsp;The blockchain Sherlock Holmes surmised that individuals behind Sorta Finance and other scams have <a href="https://crypto.news/magnet-finance-rug-pulls-6-4m-on-base-l2/" rel="noopener noreferrer nofollow">pocketed</a> over $25 million to date.&nbsp;</p>
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   <p lang="en" dir="ltr">Community Alert: The group of scammers who stole 8 figs with Magnate, Kokomo, Lendora, Solfire, etc is back with a new project on Blast @Leaperfinance <br><br>Last week they funded an address on Blast with ~$1M of laundered funds from the previous rugs and have begun adding liquidity… <a href="https://t.co/yqRKvZuuye" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/yqRKvZuuye</a></p>— ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1779333168383791411?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">April 14, 2024</a>
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<p>ZachXBT’s post highlights an emerging crypto trend that focuses on preventing blockchain crime before it happens. Individuals and collaborative entities are dedicating resources to improve on-chain safety by bootstrapping public vigilance.</p>
<p>Companies like Coinbase and initiatives like SEAL 911 have <a href="https://crypto.news/defi-white-hats-seal-911-unveil-info-sharing-tool/" target="_blank" rel="noopener noreferrer nofollow">formed</a> digital information sharing and analysis centers or ISAC to pool data on hacks, malicious activity, and criminal operations to better defi’s ecosystem.</p>
<p>Read more: <a href="https://crypto.news/revealed-what-causes-bitcoins-selling-pressure/" rel="noopener noreferrer nofollow"> Revealed: What causes Bitcoin’s selling pressure </a></p>

ZachXBT: Arbitrum lender likely an exit scam

crypto.news

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