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Kokomo Finance Steals $1.5 Million of Users' Funds Doing Contract Trick: Scam Alert

Sun, 04/02/2023 - 09:25
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Arman Shirinyan
Malicious developers use certain type of contract in order to push prohibited function
Kokomo Finance Steals $1.5 Million of Users' Funds Doing Contract Trick: Scam Alert
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Kokomo Finance (KOKO), a DeFi platform, has recently experienced a rug pull resulting in the loss of an additional $1.5 million, bringing the total rug amount to a staggering $5.5 million. The malicious developers behind the project exploited the implementation contract to execute this fraudulent activity, leaving investors in the lurch.

An implementation contract is a smart contract that contains the actual code and logic for a decentralized application (dApp) or protocol. While these contracts are essential in the execution of various DeFi functions, they can also be misused by unscrupulous developers to perform rug pulls. By altering the code or modifying certain parameters within the implementation contract, attackers can siphon funds from users, resulting in substantial financial losses for the affected parties.

In the case of Kokomo Finance, the malicious developers modified the implementation contract and managed to rug $1.5 million on March 31.

A total of 28 BTC were bridged to the 0xf650 address on Binance Smart Chain (BSC), and 22 BTC were transferred to the 0xf650 address on Arbitrum. The total rug amount now stands at a concerning $5.5 million.

The Kokomo Finance incident serves as a stark reminder of the risks associated with investing in DeFi projects. While the decentralized nature of these platforms offers numerous benefits, it also leaves them vulnerable to attacks from bad actors. Investors must exercise caution, thoroughly research any project before committing funds and seek exposure to projects that have been audited by prominent blockchain security firms.

Unfortunately, it is unclear whether it will be possible to at least partially return funds of Kokomo's victims as it usually takes months to identify real people behind rug pulls, especially if they are properly hiding their real identities.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.