Turns out a turtle’s arms are plenty long enough to pull a rug.
On Friday, Binance Smart Chain, or BSC, file storage project TurtleDex performed a “rug pull” exit scam — a colloquial term for when a project’s developers drain the liquidity or stored funds invested by the protocol.
Coming off of a March 15 presale round that raised 9,000 Binance Coin (BNB) tokens worth nearly $2.5 million, the team drained those funds from trading pools on BSC-native decentralized exchanges PancakeSwap and ApeSwap, converted the liquidity to Ether (ETH), and sent the funds to Binance exchange wallets to be sold, according to TurtleDex team wallet transactions.
Jetfuel Finance, a yield vault protocol that had partnered with TurtleDex on a farming initiative, confirmed the rug pull on Twitter, saying it was “shocked” by the scam:
Attention - The Turtledex (#TTDX) team has exit scammed.— Jet Fuel BSC ✈️ (@Jetfuelfinance) March 19, 2021
We are just as shocked as everyone to see this unfold.
Please see the tweet below from @DefiStalker and help us track down the funds sent to @binance #TTDX is being removed from Jetfuel. https://t.co/ZUjRmPbrs2 https://t.co/3WvsYSWATg
The TurtleDex website has gone dark, and social channels have been deleted.
Some investors pointed out that the project had previously been audited and no severe security issues were identified, prompting a renewed round of criticism about the efficacy of audits.
#TurtleDex $TTDX s/contract was audited by @TechRate1 on 21st of FEB, 2021. Whilst no big issues were found, it asks the question, what is the purpose of a s/contract audit? If developers can simply pull liquidty to dump, are we even asking the right Questions?$BNB $BANANA $FUEL pic.twitter.com/L8rxtwpnYo— DeFi Stalker (@DefiStalker) March 20, 2021
Ironically, according to screenshots, prospective investors had asked the team about the possibility of a rug pull in official channels. The team responded jokingly by saying that it would be impossible, as a turtle’s arms are too short.
“Chasing funds back”
Despite the loss, there may be hope for the jilted TurtleDex investors.
Shortly after the Meerkat Finance rugpull — one of the largest-ever decentralized finance scams, at $31 million — a developer for the project announced that the scam was an “experiment,” and that all funds would be returned to users.
This flimsy “experiment” backing and abrupt about-face prompted some speculation that Binance may have stepped in to mitigate the effects of the scam. BSC is a semi-closed system, with Binance controlling on- and off-ramps to the ecosystem; rug-pulled funds have few ways to exit BSC, without passing Binance’s centralized control.
Binance CEO Changpeng Zhao — better known as CZ — noted on Twitter earlier in the week that the exchange had helped in “chasing funds back” when other rug-pulled projects attempted to sell funds via Binance.
Most welcome. We actually help with a few rug pulls recently too. Can't disclose details yet. https://t.co/2zybpF0Yv7— CZ Binance (@cz_binance) March 16, 2021