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Technology

Arbitrum DEX ArbiSwap Rug Pulls Users for Over $100K

ArbiSwap’s native ARBI tokens fell from $1.5 to a fraction of a cent in the past 24 hours.

By Shaurya Malwa
AccessTimeIconMar 2, 2023 at 11:11 a.m. UTC
Updated Mar 2, 2023 at 3:39 p.m. UTC
ArbiSwap’s native ARBI tokens fell from $1.5 to a fraction of a cent in the past 24 hours. (DEXTools)
ArbiSwap’s native ARBI tokens fell from $1.5 to a fraction of a cent in the past 24 hours. (DEXTools)
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The newly launched ArbiSwap app appears to have rug pulled users after removing over $100,000 from the platform’s liquidity pools.

ArbiSwap’s native ARBI tokens fell from $1.50 to a fraction of a cent in the past 24 hours. Blockchain data shows the developers minted 1 billion fake tokens, swapping these for USD coin (USDC) and then for nearly 69 ether (ETH).

This was possible as the rogue developers controlled the project's liquidity pools. Liquidity pools refer to the token pairs held by smart contracts on decentralized exchanges, with developers initially seeding both sides of a token pair.

Blockchain data from DEXTools shows just $4 million in liquidity on ArbiSwap in European morning hours on Thursday. The service was launched in February and quickly grew to $4.4 million in total locked value (TVL).

ArbiSwap offered swapping of various cryptocurrencies for low fees on its platform and advertised giving back 100% of all generated revenue to holders of ARBI, which likely piqued the quick interest for ArbiSwap among users.

The move is a textbook rug pull, a scam carried out by developers who launch a working decentralized finance application and carry out social media marketing to popularize it before issuing a token and listing it on a decentralized exchange (DEX).

After investors have purchased the tokens in the hopes of a positive return, the developers shut up shop, remove liquidity and disappear.

CoinDesk was unable to reach ArbiSwap developers for comment. At the time of writing, the links on ArbiSwap's website were not working.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Shaurya Malwa
Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Follow @shauryamalwa on Twitter

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