Defrost Finance, the decentralized trading platform that suffered a $12 million exploit leading up to Christmas, has denied allegations that it had “rugged” its users as part of an elaborate “exit scam.”
On Dec. 23, the platform announced it suffered a flash loan attack, leading to the draining of user funds from its V2 protocol. One day later, another incident saw a hacker steal the admin key for a second “much larger” attack on the V1 protocol.
It’s understood the attacker(s) conducted the flash loan attack by adding a fake collateral token and a malicious price oracle to liquidate users.
Observers, including blockchain security firms Peckshield and CertiK, as well as asset management platform DeFiYield, have suggested based on “community intel” that members of the team may have been behind the “exit scam” — given the fact that an admin key was required to perpetrate the exploit.
However, in an exclusive statement to Cointelegraph on Dec. 28, the team behind Defrost Finance broke its silence on the rug-pull accusations, stating:
“We deny the accusations that the team rugged users. A compromised key does not equate to a rugpull, as much as the episode may raise doubts among the public.”
Defrost made two key arguments to deny its involvement.
Firstly, Defrost argued that if they had planned to orchestrate a rug pull, they would’ve done it months ago when its total value locked (TVL) neared $200 million.
According to DefiLlama, Defrost Finance’s TVL had fallen to just $13.14 million on Dec. 23, the day of the first attack.
“Anyone behind a rugpull would have probably defrauded investors when our TVL was 15 times what it is today.”
Secondly, Defrost argued that if they had been the perpetrators they would have “fled” long ago, which they haven’t done.
1/4#Defrost has managed to recover all funds taken during the the V1 hack.
This is how we will refund the investors.
A thread
— Defrost Finance (@Defrost_Finance) December 27, 2022
“[Anyone] anticipating the inevitable attention from the crypto community would have fled long ago. Yet here we are, working to get the funds back to their rightful owners,” it said.
Defrost Finance’s statement came just hours after decentralized finance investment platform DeFiYield again accused Defrost Finance of “rug pulling” its users in a Medium blog post on Dec. 27.
DeFiYield pointed to on-chain data that it claimed suggested the creator of the multi-sig wallet was the same…
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