Liquidity protocol LENX has been rocked with fresh rumors of a potential rug pull, throwing the whole crypto community into confusion. According to recent reports from pseudonymous user AstroBoy and data from Etherscan, there has been a series of transfers involving LENX Finance founders, John Kim and another individual named Paul.
LENX transfers $10 million to Binance wallet
According to several reports, about $10 million was allegedly drained from the LENX wallet and transferred to a wallet connected to a Binance account. The wallet drained has caused worry, leading to significant alarm bells among investors and market participants. The situation has been further worsened by the lack of communication from the LENX team since the issue of the transaction was reported on March 26.
Members of the protocol’s server on Discord have also shared their frustration over the transfers and the team’s lack of oversight to address it. The LENX admin has also been removing messages on the discord inquiring about the withdrawals. The lack of clarity has led to speculations with members asking questions about the stability and integrity of the protocol.
Users have also questioned the team’s inability to follow its goals of supporting Bitcoin functionalities for yield and borrowing purposes. Data from CoinGecko has also shown the impact of the issues on the platform’s native token. In January, LENX XD (XD), the protocol’s native token sold for $0.26 but the value has since fallen drastically to $0.02. This drastic fall has triggered a lot of users in the community.
Attempts by several entities to get to the root of the issues have been slightly unsuccessful. In the case of Media firm Flywheel DeFi, a conversation with co-founder John Kim was met with an unsatisfactory response. According to the firm, Kim declined to comment on the issue while noting that there was nothing to say about it at the moment.
Unveiling the facts and the community response
Meanwhile, the other co-founder Paul has been investigating the withdrawals. In his last message on the discord server, he said that investigations were still ongoing on the incident. In order to tackle concerns, the team decided to freeze the account where the fund was moved into, recouping $3 million.
While the co-founder is making efforts to recover the funds, there have been questions about the motive of the transfer. There have also been questions regarding the reputation of the protocol. Meanwhile, this incident has also showcased some of the risks associated to the crypto industry.
This issue with LENX Finance is also happening at a time where crypto fraud is on the increase. A recent report by the U.S. Federal Bureau of Investigation revealed that crypto scams have been on the rise. In its report, the FBI attributed losses of more than $2.5 billion in 2022 and losses of about $3.9 billion in 2023 to crypto scams. This rapid jump marks a 53% rise in losses due to crypto scams. This event also shows the need for better regulatory oversight and the need for investors’ education.
