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ZachXBT Unmasks Frauds on Ethereum Layer-2 Networks

1 min
Updated by Bary Rahma
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In Brief

  • ZachXBT has uncovered a malicious group targeting Layer-2 networks, including Base, Blast, and Arbitrum.
  • This group has been responsible for significant thefts from projects like Magnate, Kokomo, Lendora, and Solfire.
  • The crypto sleuth advises users to withdraw their assets from the suspicious platforms promptly to avoid risks.
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ZachXBT warned that a malicious group notorious for perpetrating blockchain fraud has its tentacles spread across various Ethereum Layer 2 networks, including Base, Blast, and Arbitrum.

According to the crypto sleuth, the group was responsible for sizable thefts from projects like Magnate, Kokomo, Lendora, and Solfire. These scammers usually accumulate assets totaling seven figures before absconding with users’ funds.

Malicious Actors Targeting Ethereum Layer-2 Networks

In an extensive report, ZachXBT disclosed that the fraudulent syndicate successfully laundered around $1 million in illicit funds. The group is now using these funds to entice unsuspecting individuals to Leaper Finance, a decentralized lending protocol operating on the Blast network.

Expanding their nefarious activities, ZachXBT has uncovered potential links between the group and another lending protocol named Zebra Lending, situated on the Base network. The investigator highlighted that the deployer of Zebra Lending is associated with an address connected to funds from Lendora and Magnate Finance protocols. Zebra Lending boasts over $300,000 in assets locked within its protocol.

Read more: Identifying & Exploring Risk on DeFi Lending Protocols

Additionally, the syndicate’s connections extend to Glori Finance, a cross-chain lending protocol established on Arbitrum. This protocol holds approximately $1.4 million worth of digital assets.

For this reason, ZachXBT recommends that users promptly withdraw their assets from these platforms to mitigate the risks.

ZachXBT investigations
The Malicious Group Transaction Trail. Source: ZachXBT

Interestingly, ZachXBT noted that each fraudulent project highlighted in the report was a Compound V2 fork. Compound is a decentralized protocol enabling users to lend and borrow crypto, with governance facilitated by its native COMP token. Data from DeFiLlama positions Compound among the top five lending platforms, boasting a Total Value Locked (TVL) of $2.57 billion.

Top crypto projects in the US | May 2024



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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.