A recent lending protocol operating on Arbitrum's network has come under scrutiny as a potential scam platform, according to blockchain investigator ZachXBT. ZachXBT, a dedicated crypto detective, has flagged Sorta Finance, a newly introduced defi lender, as a possible exit scam and a participant in a criminal network engaged in stealing funds across various blockchains. The protocol on Arbitrum raised suspicions due to its resemblance to previous rug pull incidents involving projects like Magnate Finance, Solfire, and HashDAO.
The suspected modus operandi typically entails copying Compound's lending smart contract on Ethereum Virtual Machine-compatible chains. In this scheme, unethical developers would halt the protocol and siphon off users' deposits from the total locked value.
ZachXBT's investigation revealed that the malicious actors exploited Ethereum Virtual Machine chains to gain credibility and increase Total Value Locked (TVL), often collaborating with dubious audit firms. Additionally, they employed low-tier crypto influencers to endorse their platforms, a practice popularly known as 'shilling' in the cryptocurrency realm.
Moreover, ZachXBT pointed out a transaction where an early Sorta Finance user received funds from a Tornado Cash withdrawal. Tornado Cash, a crypto mixer subject to U.S. sanctions, is utilized for obfuscating transactions. Policymakers have highlighted its misuse by criminals to conceal the origins of illicit funds.
As of July 25, Sorta Finance had a TVL of less than $100,000. Despite this seemingly modest figure, ZachXBT emphasized that analogous protocols allegedly orchestrated by the same individual attracted millions in deposits. The crypto sleuth suggested that the perpetrators behind Sorta Finance and similar scams have collectively pocketed over $25 million thus far.
ZachXBT's disclosure sheds light on a growing trend in the crypto sphere focused on preempting blockchain-related crimes. Various individuals and groups are investing efforts in enhancing on-chain security by fostering public vigilance.
Companies like Coinbase and initiatives like SEAL 911 have established digital Information Sharing and Analysis Centers (ISACs) to consolidate data on hacks, malicious activities, and illicit operations, aiming to fortify the defi ecosystem.
