DeFi Scams on the Rise as Another Protocol Defrauds Investors For $20 Million

Defi fraud

Yfdexf.Finance, the new cash mining pool DeFi project, has pulled out of the market after stealing $20 million from investors. Yfdexf initiated a two-day large-scale advertising campaign on various social media platforms, such as Twitter and Telegram, and promised free giveaways for retweets and hashtags.

A number of investors hastily leveraged their funds on the new protocol, in the spirit of a popular trend that emerged in the second half of the year, in spite of countless warnings from other investors and advisors. 

Yfdexf’s official website, as well as Medium, Twitter, and Telegram accounts that were used to conduct the advertising campaign, got deleted and none of the promised giveaways was paid. 

“Amazing how many @YFDEXF giveaways got deleted with no winners. People just pocketed the prizes since they exited,” IrishGirlCrypto said in a tweet.

The popular crypto investor and financial advisor CryptoWhale said on Twitter that Yfdexf is another representative of the norm that’s been reigning the crypto market.

CryptoWhale added that investors should be even more cautious when it comes to DeFi tokens as a majority of the projects in this space are fraudulent.

“99.99% of DeFi tokens are scams and will go this route. Please be very careful if you are heavily invested.”

Perhaps the most visible rugpull of all was SushiSwap, a fork of the UniSwap protocol, that quickly found its way into the Top 100 cryptocurrency list by market cap. ‘Chef Nomi’, the “man” behind the operation, has dumped his entire bag, worth roughly 13M USD onto the market, crashing the price, only to return the funds later. Obviously the damage has already been done and the token trades at less than 20% of its previous value.

Furthermore, two Chinese blockchain security companies SlowMist and Peckshied have also alerted investors about the EOS-powered liquidity mining protocol Emerald Mine (EMD). SlowMist said that the protocol has moved around $2.5 million worth of user tokens.

As of September 15th 2020, we are seeing a plethora of forks and copycat projects, with YF(x) being the most common money-grab format. We strongly suggest doing your own research and reading the contract itself before committing any funds to unvetted DeFi projects.