The team behind the FinSoul project was reportedly the same as the group who pulled off the much larger $31 million Fintoch exit scam in May. They used similar strategies, including using paid actors to pose as their executive team, to push the FinSoul scam.
Fintoch scammers strike again with $1.6 million FinSoul scam
A metaverse gaming project called FinSoul promised users “sandbox worlds, multiplayer sports, leisure experiences, player socializing, MMORPG,” and other features. However, on October 10, the project team made off with $1.6 million, which they then tumbled through Tornado Cash.
FSL token rug pulls for $1.68 million within 24 hours of launch
The BNB Chain-based FSL token rug pulled within 24 hours of launching, with developers draining $1.68 million of liquidity they had amassed.
Goldfinch lending platform facing $7 million loss
Goldfinch is a decentralized lending platform aiming to provide undercollateralized loans, an unusual strategy in the crypto world where loans are typically overcollateralized due to the difficulty in evaluating the trustworthiness of borrowers and in preventing them from just taking off with the loan funds.
They may now be discovering this was a bad idea, as an impending default on a $20 million loan from February 2022 threatens the platform with a possible $7 million loss.
The loan went to a fintech credit fund called Stratos, who in turn used the money for a risky real estate technology investment (now written down to zero), crypto investments of their own (not disclosed to Goldfinch, and sold at a "near full loss"), and other investments. Stratos is, awkwardly, an investor in Goldfinch, and Stratos' founder was an advisor.
This is not the first loan gone bad for Goldfinch, who suffered a loss when an African motorcycle taxi financing company used a $5 million loan to try to plug the hole in the finances of a sister company.
A commenter on the disclosure about the distressed loan wrote, "This is the second occurrence of a lack of transparency from a borrower or a lack of auditing capability from Goldfinch. We can all appreciate that Warbler Labs will backstop the loss, but it is increasingly worrying to discover a complete lack of control from the loan underwriter, especially in the context of Stratos being an equity investor in Goldfinch."
- "Real-World Asset Loan Worth $20M Sours on DeFi Platform Goldfinch, Bringing RWA Lending Under Scrutiny", CoinDesk [archive]
- "Update on Stratos Pool", post on Goldfinch governance forum [archive]
- "DeFi protocol Goldfinch aims to sever crypto's reliance on crypto", Axios
Trader Joe's sues Trader Joe
The American supermarket chain and cookie butter paradise, Trader Joe's, has filed a lawsuit against the popular Trader Joe decentralized exchange. According to the lawsuit, the supermarket believes the exchange is trying to benefit off the supermarket's popularity.
This is actually the second such lawsuit by the supermarket against the exchange, after the first was thrown out when defendants claimed that they had simply named the project after the co-founder's brother, Joe. However, shortly after the victory, a co-founder admitted on their blog that they "just named it Trader Joe, after the supermarket".
Trader Joe's is seeking all profits made by the exchange, plus damages and compensation for the failed lawsuit last year.
3Commas suffers another security breach
3Commas, a crypto trading bot provider, suffered another security breach in which some customer wallets were used to make unauthorized trades. They haven't disclosed how much in assets were lost.
This isn't the first security breach to tarnish 3Commas' reputation. In October 2022, customers reported losing a significant amount of assets in what 3Commas first tried to blame on phishing websites resembling FTX. 3Commas months later owned up to the fact that their database had been compromised, and that API keys were leaked.
UK's Financial Conduct Authority warns of Huobi and KuCoin
The United Kingdom's Financial Conduct Authority (FCA) has added another 146 entries to its "warning list" of unauthorized firms, including the crypto exchanges Huobi and KuCoin. The additions pertained to new regulations that require crypto firms who want to run promotions in the country to register with the FCA, and comply with regulations aiming to prevent misleading advertisements.
The warning list was created to notify potential users of these firms, and to inform them that losses related to the use of those platforms won't be covered by the UK's compensation scheme.
Huobi has claimed they don't operate or promote in the UK, while KuCoin gestured towards adjusting its practices in the UK. Firms on the warning list may be subjected to more serious enforcement actions in the future, including fines or even prison time.
Astrology-themed NFT project Lucky Star Currency rug pulls for $1.1 million
Lucky Star Currency was an NFT-focused project released by a group claiming to be made up of astrologists. The group was heavily promoted on Chinese news and Q&A platforms. However, not long after its release, the contract creator withdrew more than 1.6 million LSC tokens and swapped them for approximately $1.1 million.
Bitcoin mining hardware manufacturer Bitmain stops paying employees
Bitmain, the manufacturer of popular Bitcoin mining equipment (known as ASICs), is apparently in such dire financial straits that it can no longer pay employee salaries. Local media reported that all "bonuses and incentives" were nixed by the Beijing-based company, and the firm is considering cutting all wages by 50%. They also wrote a letter to employees, informing them that they would not be paying out September salaries until a review later in the month.
Stars Arena exploited for $3 million
Stars Arena, an Avalanche-based dupe of the popular Friend.Tech project, suffered a serious exploit in which an attacker drained tokens priced at around $3 million.
Avalanche co-founder and CEO Emin Gün Sirer drew widespread mockery when announcing that "the amount lost is only $3m", apparently not perceiving that $3 million is a massive sum to most people. He also didn't mention that it constituted almost the entire total TVL of the Stars Arena project, which was left with less than $1 in tokens following the attack.
Stars Arena was fortunate, in that the hacker ultimately contacted them offering to make a deal. The attacker returned 90% of the funds, keeping $300,000 as a "bounty".
THORSwap temporarily shuts down web interface as FTX hacker tries to launder $131 million
The THORSwap decentralized exchange has put its web interface into "maintenance mode" in hopes of thwarting the thief who stole over $400 million from the FTX exchange as it was mid-collapse in November 2022. Those funds have remained largely for almost a year, until the thief began moving funds recently — interestingly, coinciding with the start of Sam Bankman-Fried's criminal trial.
The attacker tried to launder around $131 million of the stolen assets by routing them through services including Railgun and THORSwap. After "consultation with advisors, legal counsel, and law enforcement", THORSwap decided to pause its web interface in hopes of making money laundering more challenging for the attacker — although the thief could still interact with the THORSwap smart contracts directly, if they so chose.
Some criticized THORSwap for apparently caving on its censorship-resistant, decentralized ethos. Others, however, saw the move as understandable given the THORSwap developers reside in the United States, which has recently cracked down on mixing services that facilitate the laundering of illicit funds.