Speculation about unexplained token transfers worth millions of dollars has sparked rumors of a slow rug pull involving liquidity protocol LENX. According to reports from pseudonymous user AstroBoy and Etherscan data, LENX Finance’s founders, John Kim and Paul, transferred over $10 million worth of treasury assets to a Binance account without clear justification, resulting in drained LENX wallets.
Complaints about the lack of communication have flooded the protocol’s Discord server since the transactions were first spotted on March 26. Users have also noticed consistent transfers to Binance and messages about the suspicious withdrawals being deleted. The community is concerned about the protocol’s integrity and the transparency of these fund transfers.
LENX Finance was launched in January 2024 with the promise of supporting native Bitcoin for yield generation or borrowing against it. LENX’s native token, LENX XD (XD), had a value of $0.26 in early January, which has decreased to $0.02 at the time of writing. The lending protocol FRAX Finance backs LENX.
Cointelegraph reached out to both co-founders of LENX Finance but did not receive an immediate response. The FRAX Finance team was also unavailable for comment.
Media company Flywheel DeFi reportedly had a conversation with Kim, but he declined to comment on the matter. Kim simply stated, “Sorry, I don’t have much to say at the moment.” Paul’s last activity on Discord was on March 26, where he announced his investigation into the withdrawals, saying, “I’m trying to investigate right now.”
According to reports on Discord, the LENX team managed to freeze the Binance account that received the funds, securing $3 million. An ongoing investigation is underway regarding Kim’s activities, while Paul is cooperating with legal efforts.
A rug pull is a scam where developers suddenly withdraw all funds from a project or liquidity pool, leaving investors with worthless tokens or assets. The Federal Bureau of Investigation (FBI) reported a significant increase in crypto-related investment fraud in the United States in 2023, with losses rising from $2.57 billion in 2022 to approximately $3.94 billion, marking a 53% increase.
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