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On May 22, 2023, Fintoch – a fraudulent DeFi exchange operating on BSC – rug pulled their investors with a shocking $31.6 million scam. A reputable on-chain analyst, ZachXBT, was the first to draw widespread media attention to this scam.
A total of $31.6 Million was stolen from deceived users.
Fintoch lured investors with the promise of a 1% daily ROI and claimed affiliation with Morgan Stanley. Although investors were warned numerous times, people rode the bandwagon and invested millions.
The Fintoch rug pull scam used deceptive techniques, including:
On May 24, Fintoch transferred 31.6 million USDT to multiple addresses on the Tron and Ethereum networks:
This move caused panic among investors as they reported being unable to withdraw their assets.
Following Fintoch’s silence on the withdrawal issue, several users flocked to the comment section of the platform’s last tweet, published on May 23, demanding an explanation. Their pleas were met with cold automated bot responses.
After a few days of inactivity, on May 26, the stolen USDT started moving on Tron to different deposit addresses on exchanges like Binance and Huione Pay.
So far, there has been no legal action or reimbursement plan, as the identities of the real founders remain anonymous.
The aftermath of the Fintoch rug pull scam had a profound impact on both investors and the reputation of DeFi. First and foremost, investors who had put their money into FTC (the Fintoch native token) found themselves in a tough spot, holding onto assets that had essentially lost their value.
What made matters worse was that the Fintoch team remained anonymous, leaving these investors with no real options for recovery or legal action. But the ramifications extended beyond the immediate victims. The scam shed a bad light on the reputation of crypto, implanting seeds of skepticism, especially toward emerging DeFi projects.
This incident didn’t just impact the interest of disheartened investors. It also drew the attention of regulators, legislators, and the media. BSC, where FTC had been actively traded, also took a hit.
Fintoch was a Ponzi project that showed all the warning signs of an exit scam. Many of the project’s claims — its CEO, affiliation with Morgan Stanley, and registration in Silicon Valley — were completely fabricated.
It promised guaranteed ROI and multiple organizations issued warnings about the scam. Despite this, the founders were able to net over $31M of user funds. This Fintoch rug pull was one of the largest exit scams in the DeFi in 2023. And it highlighted the risks and vulnerabilities of investing in unregulated and unverified projects.
In our view, the best approach is to check a project’s rating by different auditing companies. It gives you a heads-up if there is something suspicious.