Ordinals Finance Accused of Exit Scam: A Deep Dive into the Alleged Rug Pull

Ordinals Finance Accused of Exit Scam: A Deep Dive into the Alleged Rug Pull

Apr 27, 2023

The Disappearance of Ordinals Finance

Ordinals Finance, a decentralized finance (DeFi) protocol built on Ethereum that enabled users to lend and borrow inscriptions, has been accused of executing an exit scam, commonly referred to as a "rug pull."

CertiK Uncovers Suspicious Activities

On April 24, blockchain security firm CertiK released a press statement, as reported by Cointelegraph, revealing that the developer of Ordinals Finance had withdrawn 256 million OFI tokens from its smart contracts using a "safuToken" function. In addition, another 13 million OFI tokens were extracted through an "ownerRewithdraw" function, resulting in a total withdrawal of 269 million tokens.

The Impact on Investors and Market Capitalization

According to CertiK, the total loss incurred by investors is estimated at $1 million. CoinGecko data indicates that the market capitalization of OFI was $2.3 million prior to the alleged exit scam, but it plummeted to just over $143,000 after the incident. This suggests that the actual losses may have exceeded $2 million. However, some OFI token holders may have sold their tokens as the news broke, potentially accounting for the lower loss reported by CertiK.

Tracing the Withdrawn OFI Tokens

Blockchain data reveals that the Ordinals deployer account withdrew more than 256 million OFI tokens using the safuToken function. These funds were reportedly sent to a separate Ethereum account through multiple transactions. Furthermore, blockchain data shows that this particular address received OFI tokens from numerous addresses before depositing the tokens into Tornado Cash.

The Vanishing Act: Ordinals Finance's Deleted Twitter Account

In the wake of these allegations, the project's Twitter account seems to have been deleted, raising further suspicions around the legitimacy of Ordinals Finance and its intentions.

Conclusion: A Cautionary Tale in the DeFi Space

The alleged exit scam by Ordinals Finance serves as a reminder of the potential risks associated with investing in DeFi projects. Investors must exercise caution and thoroughly research the legitimacy of projects before committing their funds. While the DeFi ecosystem offers numerous opportunities for innovation and financial growth, it also presents an environment in which bad actors can take advantage of unsuspecting investors. Liquidium aims to be transparent as the whole team is doxxed. We are happy to welcome everyone who was affected by the "rug pull", to show that Ordinal Lending on Bitcoin L1 is possible in a trustless way.