Main Points about Bitcoin, web3, Ethereum, and Cryptocurrency:
- ZachXBT identified Sorta Finance as a potential scam platform on Arbitrum’s network.
- The protocol is suspected of being part of a criminal group involved in stealing funds across different blockchains.
- Malicious developers typically fork Compound’s lending smart contract on EVM-compatible chains to carry out rug pulls.
- Shady audit firms and low-tier crypto influencers are used to gain legitimacy and promote these platforms.
- The emergence of initiatives like SEAL 911 aims to enhance on-chain safety and prevent blockchain crime.
Identifying Suspected Scam Platforms on Arbitrum
An on-chain investigator, ZachXBT, has raised concerns about Sorta Finance potentially being an exit scam on Arbitrum’s network. The protocol is believed to be part of a criminal group that engages in fund theft across various blockchains. Malicious developers typically replicate Compound’s lending smart contract on EVM-compatible chains, allowing them to pause the protocol and withdraw user deposits, a practice commonly known as rug pulls.
Promotion of Scam Platforms through Shady Practices
ZachXBT highlighted how scam platforms like Sorta Finance gain legitimacy on EVM chains by tapping into shady audit firms and leveraging low-tier crypto influencers for promotion, a process referred to as “shilling.” These platforms target unsuspecting users and accumulate Total Value Locked (TVL) by deceptive means, eventually leading to significant fund losses for investors.
Enhancing On-Chain Safety Measures with SEAL 911
In response to the rising prevalence of blockchain crimes, initiatives like SEAL 911 have been established to bolster on-chain safety measures. These entities facilitate digital information sharing and analysis centers to gather data on hacks, malicious activities, and criminal operations within the decentralized finance (defi) ecosystem. By pooling resources and enhancing public vigilance, these efforts aim to prevent fraudulent activities before they occur.
