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The newly launched ArbiSwap app appears to have duped 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 last 24 hours. Blockchain data shows that developers minted 1 billion fake tokens and exchanged them for USD coins (USDC) and then nearly 69 Ether (ETH).
This was possible because the fraudulent developers controlled the project’s liquidity pools. Liquidity pools refer to the token pairs held by smart contracts on decentralized exchanges, with developers initially occupying both sides of a token pair.
Blockchain data from DEXTools shows just $4 million in liquidity on ArbiSwap in the European morning hours Thursday. The service launched in February and quickly grew to a total value of $4.4 million (TVL).
ArbiSwap offered exchanges of various cryptocurrencies on its platform for low fees and advertised returning 100% of all earnings generated to ARBI holders, which probably sparked quick interest in ArbiSwap among users.
The move is a textbook scam, a scam performed by developers launching a working decentralized finance application and doing social media marketing to publicize it before issuing a token and trading on a decentralized exchange (DEX) note.
After investors buy the tokens in 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 this article, the links on ArbiSwap’s website were not working.
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