Speculation is rife on social media platforms regarding a potential slow rug pull involving liquidity protocol LENX, as reports from pseudonymous X user AstroBoy and Etherscan data suggest unexplained token transfers worth millions of dollars.
Founders John Kim and a figure identified only as Paul allegedly moved over $10 million of treasury assets to a Binance account without providing clear justification, prompting concerns of a liquidity drain from LENX wallets.
Community members on the protocol’s Discord server have expressed frustration over the lack of communication since the suspicious transactions came to light on March 26. Complaints include consistent transfers to Binance and the removal of messages addressing the dubious withdrawals.
LENX Finance, launched in January 2024, initially pledged support for native Bitcoin for yield generation or borrowing purposes. Its native token, LENX XD (XD), witnessed a decline in value from $0.26 in early January to $0.02 at present. LENX is affiliated with lending protocol Frax Finance.
Attempts to reach out to both LENX Finance co-founders and the Frax Finance team for comment were unsuccessful. Media outlet Flywheel DeFi reportedly conversed with Kim, who declined to comment. Meanwhile, Paul has been actively investigating the withdrawals, according to his last Discord activity on March 26.
Discord reports indicate that the LENX team managed to freeze the Binance account linked to the transfers, safeguarding $3 million. An investigation into Kim’s actions is ongoing, while Paul is said to be cooperating with legal proceedings.
A rug pull refers to a scam tactic wherein developers swiftly withdraw all funds from a project or liquidity pool, leaving investors with worthless tokens or assets.
In 2023, the United States Federal Bureau of Investigation observed a significant surge in crypto-related investment fraud, with losses escalating from $2.57 billion in 2022 to approximately $3.94 billion, marking a 53% increase.
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