In a concerning turn of events, Magnate Finance, a lending project operating on the Ethereum Layer 2 network Base, appears to have executed an exit scam, leaving an estimated $6.4 million in its wake.
Referred to as a “rug pull” by cybersecurity firm PeckShield, this term describes a situation where crypto developers deceitfully vanish with funds that users have deposited.
PeckShield’s investigation revealed that Magnate Finance took manual control of the price oracle employed by the lending protocol, effectively draining all user deposits.
In a disturbing twist, the Magnate Finance team has erased virtually all traces of its digital existence. The project’s social media accounts on platforms like Twitter and Telegram have been wiped out, and the official website is currently inaccessible.
The revelation of this exit scam emerged following a warning from on-chain analyst ZachXBT. The analyst had earlier raised concerns about Magnate Finance on Base, indicating a potential exit scam.
This suspicion stemmed from the discovery that the deployer address associated with Magnate Finance was directly linked to a previous exit scam involving a project named Solfire, which defrauded users of $4.8 million.
August has proven to be a challenging month for Base. This incident marks the second instance of a rug pull within the month.
In an earlier episode, SwirlLend vanished in an exit scam, absconding with $460,000. Notably, this exit scam impacted both Base and Linea.