Kokomo Finance team suspected of $4 million exit scam

The developers of the DeFi project Kokomo Finance are reportedly missing, having stolen $4 million of user funds, according to CertiK researchers.

#CertiKSkynetAlert ?

On 26 March 2023, Kokomo Finance conducted an exit scam and stole ~$4 million in user funds.

Details Below ? https://t.co/BEPwfahblz

— CertiK Alert (@CertiKAlert) March 26, 2023

Experts noted that the project team deleted their accounts on all social networks.

A non-custodial lending protocol built on layer-2 solutions on Optimism began operating on March 23.

According to DeFi Llama, the value of funds locked in the project reached about $2 million. More than 72% of the volume was in “wrapped bitcoin” — WBTC.

According to CertiK, on March 26 the Kokomo developers made changes to the smart contract that disabled the reward and borrowing functions. They then approved the spending of 7010 Sonne WBTC (so-WBTC). The assets were swapped by the team for 141 “wrapped bitcoin” worth about $4 million.

The KOKO token collapsed to zero. At its peak, the coin price reached $0.05.

The protocol audit prior to launch was conducted by 0xGuard. The project passed scrutiny on most aspects. Experts pointed to technical flaws in the code and to the possibility for the owner of KOKO to unilaterally transfer 45% of the total token supply to an arbitrary address.

In 2022, crypto-industry users lost $63.9 billion as a result of 359 incidents, including hacks and bankruptcies.