Chibi Finance vanishes with $1 million on Arbitrum network in apparent 'rug pull'

Chibi Finance, a recently launched DeFi project operating on Arbitrum's Layer 2 network, has been accused of staging a “rug pull,” allegedly absconding with roughly $1 million in user deposits.

On-chain analysis carried out by security analysts at PeckShield showed that 555 ether (ETH), equivalent to $1 million, was drained from the platform’s liquidity pools.

The team behind Chibi Finance withdrew tokens staked by users on its platform and converted them to ether. The funds were then funneled from the Arbitrum network to Ethereum and routed through Tornado Cash, a popular Ethereum mixing service used to obfuscate transaction trails, according to PeckShield.

The Chibi team vanishes

Amid these movements, the Chibi Finance team’s digital presence vanished overnight. Its social media accounts on Twitter and Telegram, as well as the project’s website, chibi.finance, are no longer accessible. The Block was not able to contact the project for comment. 

Meanwhile, the price of the project-issued chibi tokens, which hovered at around $1 yesterday, took a sharp nosedive, plummeting to just $0.017, according to DEX Screener data.

This incident is the latest in a series of apparent exit scams that have resurfaced on Arbitrum and the broader Ethereum Layer 2 ecosystem recently. Last month, the developers of an Arbitrum-based project known as Swaprum disappeared with nearly $3 million in a similar case. Earlier, in April, a decentralized exchange named Merlin, operating on zkSync, exited after siphoning off user funds worth $2 million.