- ETHTrustFund DAO is accused of stealing $2 million and laundering the funds through a mixer app.
- Developer Peng deleted all of his accounts without saying anything for several months before the lawsuit was filed.
- In addition to ETHTrustFund, other cryptocurrencies that have recently gained attention in the cryptocurrency market include Gemholic and Ordiz, which show an increasing risk of fraud.
In a worrying development for cryptocurrency investors, ETHTrustFund DAO, a decentralized autonomous organization (DAO) that operates on the Base network, has been accused of extorting $2 million in ransomware.
These claims, corroborated by a recent report from 0ctoshi, suggest that the project intentionally carried out a withdrawal scam.
According to a detailed report by blockchain security firm PeckShield, ETHTrustFund transferred all funds to a new wallet on July 20, 2024.
The funds were then moved through hybrid applications such as Tornado Cash and Railgun, in what appears to be an attempt to cover their tracks and launder the stolen assets.
#PexshieldNotification #rugfull @0ctoshi reported that @ethtrustfund_ Solid ~2m USD worth of cryptocurrency #Base.
The scammers have already connected the stolen funds. #ethereum & washed it with this. #TornadoCache & #railgun https://t.co/jmKVgiQb8C pic.twitter.com/MzJsvQ1pyV— PeckShieldAlert (@PeckShieldAlert) July 22, 2024
The rise and fall of ETHTrustFund
Modeled after successful projects like Olympus and Wonderland, ETHTrustFund initially attracted investors by promising a unique rebasing mechanism.
The project is designed to offer blockchain-based bonds and issue new ETF tokens to users who hold stakes.
Unlike traditional rebaseDAOs that continually increase token supply, ETHTrustFund aims to eventually lower the token value to increase the value of the remaining supply, thereby generating returns for investors.
But the direction of the project took a dramatic turn when reports emerged that lead developer Peng had stopped communicating with the community in April.
According to Octoshi, the lack of activity from Peng, along with the sudden disappearance of ETHTrustFund’s online presence, including its website and social media accounts, points to a potential withdrawal scam.
Octoshi first highlighted this issue on July 21, 2024, reporting that the project had moved over $2 million from the Treasury to a new wallet and was withdrawing the funds through the Railgun Project.
The official Telegram and social media accounts for the project, which were managed by Peng, have been deleted.
After these facts came to light, Octoshi urged the community to report scams to Chainabuse, a platform that documents and combats fraudulent activity in the cryptocurrency space.
A Chainabuse report by user @cryptogle confirmed these claims and highlighted the sudden disappearance of the project.
The aftermath of withdrawal scams in cryptocurrency
The ETHTrustFund incident follows a series of similar scams that have occurred in the cryptocurrency industry.
In June, the Gemholic protocol was accused of committing a $3.5 million withdrawal scam, and in March, the Ordiz bridge management account was accused of committing a $1.4 million fraud.
These cases demonstrate the continued risk of fraud in the rapidly evolving cryptocurrency environment, and highlight the need for vigilance and thorough due diligence among investors.