Unexplained transfers on LENX protocol spark rug pull concerns

The NFT Unicorn 8bb57c0b-6e90-4490-9bca-d82e556cc1c6 Unexplained transfers on LENX protocol spark rug pull concerns Crypto News

Rumors of a slow rug pull involving liquidity protocol LENX are flooding social media channels as the community speculates about unexplained transfers of tokens worth millions of dollars. 

According to reports from pseudonymous X user AstroBoy and Etherscan data, LENX Finance’s founders, John Kim and a person simply known as Paul, had transferred over $10 million worth of treasury assets to a Binance account without clear justification, draining LENX wallets.

Source: AstroBoy

On the protocol’s Discord server, users have complained about the lack of communication since the transactions were first spotted on March 26, along with consistent transfers to Binance and messages about the suspicious withdrawals being removed.

The protocol was launched in January 2024, promising to support native Bitcoin for yield generation or to borrow against. According to CoinGecko, LENX’s native token, LENX XD (XD), was valued at $0.26 in early January, versus $0.02 at the time of writing. LENX is backed by the lending protocol FRAX Finance.

Cointelegraph reached out to both co-founders of LENX Finance but did not receive an immediate response. The FRAX Finance team was not available for comment.

The NFT Unicorn a91697f9-98ad-4bde-ae54-1bffbe2d0224 Unexplained transfers on LENX protocol spark rug pull concerns Crypto News
Community member 0xg4m813 points to issues surrounding the protocol amid debate over funds transfers. Source: LENX’s Discord

Media company Flywheel DeFi reportedly spoke with Kim over a chat, but the co-founder declined to comment. “Sorry, I don’t have much to say at the moment,” Kim wrote. Paul’s last Discord activity was on March 26, when he announced he was investigating the withdrawals. “I’m trying to investigate right now.”

According to reports on Discord, the LENX team was able to freeze the Binance account that received the funds, with $3 million in remaining funds safeguarded. An ongoing investigation is reportedly in progress over Kim’s activities, while Paul is cooperating with legal efforts.

A rug pull is a type of scam where developers suddenly withdraw all funds from a project or liquidity pool, leaving investors with worthless tokens or assets.

In 2023, the Federal Bureau of Investigation (FBI) reported that crypto-related investment fraud saw a significant increase in the United States, with losses rising from $2.57 billion in 2022 to approximately $3.94 billion, marking a 53% increase.

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