Security Firms Warn of Potential DeFi Exit Scam After $2.5M in ‘Locked’ Cryptos Moved

Two blockchain security firms have warned that the creators of a DeFi contract on the EOS network may have fled in what appears to be an exit scam.

China-based auditing firm SlowMist said on Wednesday that a liquidity mining DeFi project on EOS called Emerald Mine (EMD) has moved users’ tokens that were supposedly locked in smart contract to an account labeled “sji111111111” since early Wednesday China time.

SlowMist warned users not to send additional funds to the smart contract for liquidity mining, as part of funds have already been transferred to exchange platforms.

PeckShield, another China-based blockchain security startup, published a similar notice on WeChat soon after, saying the funds on the move include users’ locked-up assets of some 787,000 USDT, 490,000 EOS and others – worth nearly $2.5 million in total.

Both firms said users participating in DeFi liquidity mining should be aware of EOS contracts that have no multi signature (multisig) feature, meaning whoever is behind the contract can move assets even if they are supposed to be locked up.

The EMD project’s website has since become inaccessible.

PeckShield said USDT tokens that are part of the apparently absconded funds are being sold via decentralized exchanges like DeFibox.

It’s not yet clear who’s behind the project, but the event has sparked users to send small transactions to the sji111111111 account on Wednesday with angry messages demanding that the alleged scammer return their funds.

So-called liquidity mining has drawn wide interest over recent weeks, with some of the Ethereum-based tokens in such projects seeing heavy speculation on both decentralized and centralized exchanges.