Ethereum's DeFi Space Just Saw An Exit Scam: Here's How It Went Down

Ethereum’s DeFi Space Just Saw An Exit Scam: Here’s How It Went Down

Nick Chong

Last Updated: August 4, 2020 3:00 am

2 mins read

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The growth in Ethereum’s decentralized finance space has been one of the biggest wealth-generation events in the crypto space of the past year. Coins pertaining to “DeFi,” as this part of cryptocurrency has been dubbed, have literally gone parabolic. Simultaneously, there have been extremely high yields/interest rates offered on certain DeFi products.

The profits made in DeFi, unfortunately, have attracted some unsavory folk. Reports recently came out suggesting that there was a notable DeFi exit scam that went down this past weekend.

Ethereum-Based “Asuka Finance” Purportedly Exit Scams

Doo Wan Nam, part of the Asia business development team at MakerDAO, recently revealed that there was an exit scam in the DeFi space that just took place.

According to a thread he released on the matter, in which he cited local South Korean media, the programmer behind “Asuka.finance” exited with a purported $64,000 worth of cryptocurrency.

The programmer, who goes by “Jongchan,” lured in victims by touting Asuka’s high investment yields on Telegram, Discord, and KakaoTalk. The latter of which is a popular messaging platform in South Korea.

After managing to draw in millions of dollars worth of liquidity while boosting the price of Asuka, he purportedly emptied ~$64,000 worth of cryptocurrency from a decentralized Ethereum liquidity pool.

Jongchan purportedly left many millions in the pool because he “burned many of his keys including the ability to mint more [coins] and drain the pool when he lured his victims.”

Alright so @asukafinance , #YFI @iearnfinance fork made by a Korean guy exit scammed this morning. Here's what the Korean blockchain community knows so far 🤔 pic.twitter.com/UzAx24ylBa

— Doo | StableLab (@DooWanNam) August 3, 2020

DeFi Won’t Stop Growing

Although DeFi may face setbacks like being exit-scammed or hacked, it’s a trend that many expect to continue to grow.

As reported by NewsBTC, there is $4.21 billion worth of value locked in blockchain-based finance applications as of August 2nd. This metric is up from the $1 billion reading taken 90 days ago.

Chart of the amount of value locked over the past three months (90 days) from DeFi Pulse.

Spencer Noon, the head of DTC Capital, expects for this trend of growth to continue into the future. The investor wrote on August 3rd:

“My read on #DeFi after speaking with instl investors, fund mgrs, OTC desks, and FOs over the last few wks: The herd is coming. They’re excited about DeFi but new to it, so they’re buying $ETH first. Once positions are set, I expect them to move up the risk spectrum to protocols.”

Case in point: cryptocurrency-centric fund Electric Capital just raised a $110 million fund that will have a focus on DeFi.