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Kokomo Finance, a lending protocol that had recently launched on Optimism, rug pulls users and disappears with approximately $4 million worth of tokens. The project’s token, KOKO, had only been launched less than 36 hours before the rug. The rug occurred through changes made by the project’s deployer address, which rugged Wrapped Bitcoin deposits. The project’s website, Twitter, GitHub, and Medium, were deleted soon after.
Kokomo Finance has taken off with approximately $4 million worth of user funds, leaving users unable to withdraw their funds. Wrapped Bitcoin deposits were rugged, with almost $2M of tokens still remaining in the project’s pools on Optimism.
The deployer of KOKO Token, identified as address 0x41BE, created a malicious contract called cBTC, modified the reward speed, paused the borrow function, and replaced the implementation contract using the function mentioned below with the malicious one. Another address, 0x5a2d, approved the cBTC contract to spend 7010 sonne WBTC. After the implementation contract was switched to the malicious cBTC contract, the attacker used the 0x804edaad method to transfer sonne WBTC to address 0x5C8d. Finally, the address 0x5C8d swapped 7010 sonne WBTC for 141 WBTC (~4M) in profit.
Steps to reproduce
The attacker deployed a contract called cBTC, then changed its implementation to a malicious contract. The attacker then called the 0x804edaad method to transfer tokens to a different address and ultimately swapped those tokens for profit.
The stolen funds are currently held in four addresses:
Here are some indicators to look for in a smart contract that may indicate it could be a rugpull:
Anonymous or unknown team: A team that is anonymous or unknown should be a red flag as they may not have any reputation to uphold and can disappear easily.
Unaudited code: A smart contract that has not been audited or reviewed by reputable third-party auditors increases the risk of vulnerabilities and potential exploits.
Centralized control: A smart contract that gives excessive control to the owner or a small group of individuals can lead to potential misuse of funds or a rugpull.
Lack of transparency: A rugpull often involves a lack of transparency or information on the project, such as unclear tokenomics or a lack of information on the team or project roadmap.
Unrealistic promises: Projects that make unrealistic promises of high returns or quick profits without a clear explanation of how these returns will be generated should be approached with caution.
Lack of liquidity: If a project has low liquidity or a small number of holders, it may be easier for a rugpull to occur as there may not be enough holders to prevent a large-scale dump.
Sudden changes or delays: A sudden change in the project roadmap or significant delays in project milestones without proper communication to investors can be a warning sign of a potential rugpull.
Kokomo Finance’s rugpull serves as a warning to the importance of conducting thorough security audits and implementing proper security measures in decentralized finance. As the rug occurred through changes made by the project’s deployer address, it is important to ensure that all aspects of a protocol are audited and secured.
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