The Ethereum-based DeFi protocol Ordinals Finance has been charged with exit fraud after it is claimed that 269 million OFI tokens worth $1 million were taken out of its smart contracts.
- An exit fraud is allegedly being carried out through the DeFi protocol on Ethereum called Ordinals Finance.
- According to blockchain security company CertiK, the protocol’s developer withdrew 13 million OFI tokens via an “ownerRewithdraw” function and 256 million OFI tokens via a “safuToken” function.
Introduction
Decentralized finance (DeFi) protocols have gained popularity in recent years due to their ability to enable lending and borrowing without the involvement of intermediaries like banks. But there has also been a surge in fraudulent schemes along with the growth of DeFi. One such instance is Ordinals Finance, a DeFi system built on Ethereum that has been accused of engaging in an exit scam, commonly called a “rug pull.”
What is Ordinals Finance?
A DeFi system called Ordinals Finance lets users lend and borrow inscriptions on the Ethereum network. Little is known about the group responsible for the project and the person who developed the protocol. It was introduced in March 2021, and OFI is its native token.
The Alleged Exit Scam
Ordinals Finance committed an exit fraud, according to a report from the blockchain security company CertiK on April 24, 2023. The protocol’s developer allegedly used a “safuToken” function to remove 256 million OFI tokens from its smart contracts. The “ownerRewithdraw” method was used to draw an additional 13 million OFI, bringing the total number of permits withdrawn to 269 million. As a result, the total loss to investors is calculated to be $1 million.
Impact on Investors
The market capitalization of OFI was $2.3 million before the alleged exit scheme. According to data from CoinGecko, the market capitalization decreased to just over $143,000 after the incident. This implies that losses exceeded $2 million. The smaller sum indicated by CertiK may, however, be due to some OFI token owners selling their tokens as the news spread.
The project’s staff may no longer be active as the Ordinals Finance Twitter account was deactivated on the same day as the alleged scam. Additionally, the fact that the project’s website is currently down raises the possibility that the organization has pulled an exit fraud.
How the Exit Scam Occurred?
According to blockchain data, the Ordinals deployer account used the safuToken function to withdraw more than 256 million OFI tokens. Then, over numerous transactions, this money was transferred to another Ethereum account. The Tornado Cash Ethereum mixer, which focuses on privacy, is where the address that got the OFI tokens from the deployer account deposited them.
Further analysis revealed that the deployer account exchanged 256 million OFI for ether in 12 separate transactions after receiving them. The deployer then sent 85.5 ETH to the account with the last letter “cCF,” which was placed into Tornado Cash.
The safuToken transfer was carried out using a contract called “OEB Staking,” which appears to permit the contract’s “owner” to transfer all staked tokens to themselves. Additionally, the deployer account repeatedly used “ownerRewithdraw” to make calls to the OFI Staking contract to transfer tokens to itself. The owner can use this function to withdraw any number of tokens from the staking contract as long as the balance is higher than a variable called “totalOwedValue.”
Conclusion
The alleged exit fraud by Ordinals Finance highlights the risks of investing in DeFi protocols. DeFi has numerous advantages, including greater accessibility and openness, but it’s crucial to be aware of any concerns. Before participating in any DeFi enterprise, investors should conduct due diligence and only spend money they can afford to lose. To protect investors, regulatory bodies should keep an eye on the DeFi market and take action against fraudulent operations.
