According to blockchain security firm PeckShield, Web3Memes (W3M), a memecoin based on Binance Smart Chain (BSC), has had its liquidity pools depleted at nearly 625 Binance Coins (BNB). This is the last rug pulling that took place using Tornado Cash.
At the time of publication, the amount was valued at $235,000. PeckShield reported the exploit via a tweet from his official Twitter handle.
So what happened?
According to Blockchain data, the coin was launched in the early hours of the morning and listed on the BSC-based PancakeSwap soon after. In the following hours, W3M saw over 1,800 transactions and over 1,000 holders, at the time of writing.
However, five hours after its issuance, the mysterious creators removed liquidity from W3M, resulting in the infamous ‘pull of the rug’, a cryptocurrency market term for such acts.
After pulling the rug, W3M prices collapsed from highs of $0.000000204 to around $0.00000000277, a drop of nearly 100%.
How was the rug pulled?
Anyone on BSC or other networks can create a token like Web3Memes. Issuers can pair these tokens with another popular token such as Tether or BNB and offer the pair on a decentralized exchange as a way of providing initial liquidity. Instead of third parties or centralized bodies, the procedure is fully automated and based on smart contracts.
Once the act has been carried out, the hackers must withdraw the money as soon as it is withdrawn (permanently transferred to the bad guys’ accounts). Typically, they send the funds to Tornado Cash, a cryptocurrency mixing environment.
Without Tornado-based obfuscation, cryptocurrency trading platforms quickly blacklist attackers’ addresses, allowing them to sell stolen cryptocurrencies on cryptocurrency exchanges for fiat. All addresses involved in rug pulling are tagged in top explorers minutes after initial statements about the scam go viral on Crypto Twitter.
The Tornado Cash Story with Stolen Tokens
Tornado Cash has had a controversial rep when it comes to hackers getting away with stolen tokens. Previously, Tornado Cash was used by the hackers who made off with 440 ETH from Bent Finance. PeckShield has warned users to stay away from tokens deployed by funds withdrawn from Tornado Cash.