io.net (io) 
A new lending protocol on Arbitrum’s network may be a scam platform, according to on-chain investigator ZachXBT. Crypto sleuth ZachXBT has flagged the newly launched DeFi lender Sorta Finance as a potential exit scam, linking it to a group allegedly stealing funds across blockchains. ZachXBT notes that the Arbitrum-based protocol shows similarities to past rug pulls such as Magnate Finance, Solfire, and HashDAO.
The typical method involves forking Compound’s lending smart contract on Ethereum Virtual Machine-compatible chains. Malicious developers then pause the protocol and withdraw user deposits from the total value locked (TVL).
Community Alert: @Sorta_Finance is likely to exit scam on Arbitrum in the future so do not use the protocol. This scammer has previously stolen $25M+ with scams such as Magnate, Kokomo, Lendora, Solfire, Crolend, HashDAO, etc.
ZachXBT’s investigation revealed that bad actors gained legitimacy on EVM chains and accrued TVL by leveraging shady audit firms. They also paid low-tier crypto influencers to promote these platforms, a practice known in the crypto community as “shilling.”
Additionally, ZachXBT pointed out that a Tornado Cash withdrawal funded an early Sorta Finance user. Tornado Cash is a U.S.-sanctioned crypto mixer used to obscure transactions, often noted by lawmakers as a tool criminals use to hide the origin of funds.
As of July 25, Sorta Finance had less than $100,000 in TVL. However, ZachXBT emphasized that similar protocols, seemingly orchestrated by the same individuals, have led to millions in deposits. The investigator estimates that the people behind Sorta Finance and other scams have accumulated over $25 million to date.
Community Alert: The group of scammers who stole 8 figures with Magnate, Kokomo, Lendora, Solfire, etc. is back with a new project on Blast @Leaperfinance. Last week they funded an address on Blast with ~$1M of laundered funds from previous rugs and have begun adding liquidity…
ZachXBT’s findings highlight an emerging trend in the crypto world focused on preventing blockchain crime before it occurs. Individuals and collaborative entities are dedicating resources to enhance on-chain safety by fostering public vigilance. Companies and initiatives are forming digital information-sharing and analysis centers (ISAC) to pool data on hacks, malicious activities, and criminal operations to improve the DeFi ecosystem.
Stay informed and explore more news on Global Crypto News.
