Arbitrum-based DEX ArbiSwap rugs users days after launch – token down 99%

Arbitrum-based decentralized exchange (DEX) ArbiSwap rugged users on March 2, and as of press time, the ARBI token has lost more than 99% of its value.

The token crashed from $1.5 to $0.0000000093 following the rug.

The ArbiSwap developers controlled the platform’s liquidity pools as they seeded most of the ARBI pairs at launch.

According to PeckShield, the ArbiSwap deployer minted 1 trillion tokens and then swapped them for USDC, causing a significant drop in the value of ARBI in the USDC/ARBI pair on the DEX. The exploiter then executed a spatial arbitrage trade in the next block and swapped the USDC back to ARBI, then traded all of it for Ethereum — netting a total profit of 68.47 ETH from the transaction.

Based on on-chain data, the Arbi rug pullers stole roughly 84 ETH from the project and moved it to Tornado Cash.

ArbiSwap was launched on Feb. 24, claiming to offer ARBI holders 100% of the revenues generated on the DEX. The DEX claimed to hit $1 million in total value locked (TVL) on the platform within 30 minutes of its launch and managed a total TVL of $4.4 million, according to DeFiLlama data.

Additionally, ArbiSwap was promoting yield farming and staking services with APYs upwards of 1000% on ETH and Bitcoin pairs.

The developers behind the platform were anonymous and it is unclear whether any legal action will be taken following the rug pull. Due to the nature of the crypto industry, such scams have been common throughout its history.

People continue to fall for marketing schemes promoting services offering profits that are too good to be true. The severe lack of education and awareness around crypto means it’s fertile ground for scammers.