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Amid increasing regulations in the cryptocurrency industry, we continue to witness the reasons for this uptick. The most recent example is Swaprum, a decentralized exchange on the Ethereum Layer 2-focused Arbitrum network.
Big Profit from Swaprum
Swaprum appears to have made a significant theft, seemingly carrying out a rug pull with user funds on the Arbitrum network. Swaprum, which is believed to have approximately $3 million in user funds, was exposed by PeckShield. The on-chain analysis firm and blockchain security platform, PeckShield, indicated that approximately 1,628 ETH, equivalent to $3 million, was under the control of the platform. As could be expected, these funds were “siphoned off” from the platform’s liquidity pools.
The Swaprum team sold the siphoned tokens in exchange for ETH, leading to a massive drop in the price of Swaprum (SAPR) tokens. Investors left holding SAPR must presumably come to terms with the fact that they cannot sell these tokens due to lack of liquidity.
It is evident that the funds were transferred from the Arbitrum network to the Ethereum network. The stolen funds were then seen to be laundered via the popular mixer service Tornado Cash. While Tornado Cash is often used for such purposes, it cannot be said that everyone interacting with this platform has similar intentions.
The Swaprum team seems to be trying to erase their online presence as well. They deleted their accounts on Twitter, Telegram, and GitHub virtually overnight. However, the project’s front-end, its official website, remains active.
SAPR Price Hits Bottom
Security analysts from Beosin stated that there was a hidden backdoor in Swaprum’s smart contract. This essentially paved the way for Swaprum’s creators to easily seize the tokens given to liquidity providers. Subsequently, it is suggested that the founders, who withdrew the liquidity, carried out the siphoning in this way.
Looking at the SAPR price, it is easy to see the moment of the attack and the price’s sharp response.
This incident underscores the need for investors to allocate funds only to well-researched projects. The increasing anticipation of airdrops recently has led users to interact with too many platforms without conducting any research, and the risk is escalating.
