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Swaprum DEX team disappears with $3 million in apparent exit scam on Arbitrum network

Crypto Ecosystems • May 19, 2023, 6:36AM EDT

Quick Take

  • Swaprum, a decentralized exchange on Ethereum Layer 2 network Arbitrum, appears to have absconded with user deposits.
  • On-chain analysis by PeckShield found that about 1,628 ETH ($3 million) was siphoned off from Swaprum’s liquidity pools.

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Swaprum, a decentralized exchange on the Ethereum Layer 2 network Arbitrum, appears to have executed an “exit scam” commonly referred to as a “rug pull,” absconding with an estimated $3 million in user deposits.

On-chain analysis from blockchain security firm PeckShield found that approximately 1,628 ETH, equivalent to $3 million, was siphoned off from the platform’s liquidity pools.

The Swaprum team withdrew liquidity provided against the platform’s native token on its exchange. It subsequently sold the tokens against ETH which led to a complete plunge in the price of swaprum (SAPR) tokens, rendering the remaining tokens held by unsuspecting investors virtually worthless.

The funds were then transferred from the Arbitrum network to Ethereum. The ill-gotten ether was laundered through Tornado Cash, a popular Ethereum mixer service in an apparent attempt to obfuscate the transaction trail and deter authorities from tracing the funds.

Swaprum deletes social media

Swaprum’s digital footprint virtually vanished overnight, with their social media accounts on Twitter, Telegram and GitHub being deleted. The official website, which served as the front-end for the project’s protocol, remains active. The Block wasn’t able to contact the project was comment. 

Security analysts at Beosin discovered that Swaprum’s smart contract harbored a hidden backdoor functionality. Beosin stated, “The deployer of Swaprum used the add() backdoor function to steal LP tokens staked by users, then removed liquidity from the pool for profit.” This malicious action allowed the perpetrators to take over assets at will.

This is the latest exit scam to have resurfaced in the Ethereum Layer 2 ecosystem. Last month, developers of a decentralized exchange on the zkSync network, known as Merlin, disappeared with nearly $2 million in a similar case.

Swaprum Token Price | Source: Dexscreener