Turns out a turtle’s arms are plenty long enough to pull a rug.
Yesterday, March 19 Binance Smart Chain (BSC) file storage project TurtleDex performed a “rugpull” exit scam — a colloquial term for when a project’s developers drain the liquidity or stored funds invested by the protocol.
Coming off a March 15 presale round that raised 9000 BNB tokens worth nearly $2.5 million, the team drained those funds from trading pools on BSC-native decentralized exchanges Pancake Swap and Ape Swap, converted the liquidity to ETH, and sent the funds to Binance exchange wallets to be sold, according to TurtleDex team wallet transactions.
Jet Fuel Finance, a yield vault protocol which had partnered with TurtleDex on a farming initiative, confirmed the rugpull on Twitter, saying they were “shocked” by the scam:
Attention – The Turtledex (#TTDX) team has exit scammed.
We are just as shocked as everyone to see this unfold.
— Jetfuel Finance & Fortress Lending BSC ✈️ (@Jetfuelfinance) March 19, 2021
The TurtleDex website has gone dark and social channels have been deleted.
Some investors pointed out that the project had previously been audited and no severe security issues were identified, prompting a renewed round of criticism about the efficacy of audits
#TurtleDex $TTDX s/contract was audited by @TechRate1 on 21st of FEB, 2021. Whilst no big issues were found, it asks the question, what is the purpose of a s/contract audit? If developers can simply pull liquidty to dump, are we even asking the right Questions?$BNB $BANANA $FUEL pic.twitter.com/L8rxtwpnYo
— DeFi Stalker (@DefiStalker) March 20, 2021
Ironically, according to screenshots prospective investors had asked the team about the possibility of a rugpull in official channels; the team responded jokingly by saying that it would be impossible, as a turtle’s arms are too short.
— Danusarf (@Danusarf) March 19, 2021
“Chasing funds back”
Despite the loss, there may be hope for jilted TurtleDex investors.
Shortly after the Meerkat Finance rugpull — one of the largest-ever DeFi scams at $31 million — a developer for the project announced that the scam was an “experiment,” and that all funds would be returned to users.
The flimsy “experiment” backing and abrupt about-face prompted some speculation that Binance may have stepped in to mitigate the effects of the scam. BSC is a semi-closed system, with Binance controlling on-and-offramps to the ecosystem; rugpulled funds have few ways to exit BSC without passing Binance’s centralized control.
Binance CEO Changpeng Zhao — better known as CZ — noted on Twitter earlier in the week that the exchange had helped in “chasing funds back” when other rugpulled projects attempted to sell funds via Binance.
Most welcome. We actually help with a few rug pulls recently too. Can't disclose details yet. https://t.co/2zybpF0Yv7
— CZ 🔶 Binance (@cz_binance) March 16, 2021