Speculations of a potential rug pull on liquidity protocol LENX have surfaced, as the community raises concerns about significant and unexplained token transfers amounting to millions of dollars.
Reports from pseudonymous user AstroBoy and Etherscan data reveal that LENX Finance’s founders, John Kim and an individual known as Paul, initiated transfers exceeding $10 million from the protocol’s treasury assets to a Binance account, prompting a drain on LENX wallets.
BREAKING 🚨@LENX_Finance's Founder (John Kim) has allegedly cheated the team, running off with over $10,000,000 in stolen funds and transferring them to Binance.@fraxfinance has doxed him, his identity is public knowledge. I will need your engagement to bring this case to… https://t.co/7qShTX8JUh
— AstroBoy🔮🉐 (@fevrdad) March 27, 2024
Users on the protocol’s Discord server have expressed frustration over the lack of communication following the discovery of these transactions on March 26. Moreover, consistent transfers to Binance and discussions regarding the suspicious withdrawals have been reportedly deleted from the platform.
Launched in January 2024, LENX promised to facilitate yield generation or borrowing against native Bitcoin. CoinGecko data indicates that LENX’s native token, LENX XD (XD), was valued at $0.26 in early January but has since declined to $0.02.
Attempts to reach out to both co-founders of LENX Finance and the FRAX Finance team for comment have been unsuccessful thus far.
Flywheel DeFi reportedly engaged in a chat with Kim, who declined to provide a comment, saying:
“Sorry, I don’t have much to say at the moment.”
Meanwhile, Paul’s last activity on Discord was on March 26, when he mentioned investigating the withdrawals.
As per Discord reports, the LENX team managed to freeze the Binance account receiving the funds, safeguarding $3 million. An ongoing investigation is underway regarding Kim’s activities, while Paul is said to be cooperating with legal proceedings.
A rug pull, characterized by developers abruptly withdrawing all funds from a project or liquidity pool, can leave investors with worthless tokens or assets. In 2023, the FBI reported a significant surge in crypto-related investment fraud in the United States, with losses escalating from $2.57 billion in 2022 to approximately $3.94 billion, indicating a 53% increase.
