DeFi Project Meerkat Allegedly Hacked for $31m, Skeptics Claim It Might Be an Exit Scam

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DeFi Project Meerkat Allegedly Hacked for $31m, Skeptics Claim It Might Be an Exit Scam

Mar 6 2021

Image: franjesmi / Adobe Stock

In brief

  • Meerkat Finance recently launched its coin on Binance Smart Chain only to be hacked one day later.
  • The project’s team announced that ‘hackers’ stole $31 million in BNB and BUSD.
  • However, many doubt this story, claiming that it doesn’t make sense, and that Meerkat itself might be responsible.

DeFi project Meerkat Finance recently lost $31 million in BNB and BUSD, and only a day after launch, with claims that someone hacked their smart contract vault to drain the coins, although many suspect foul play on the project’s end.

The crypto industry has always been filled with hackers, scammers, and other kinds of fraudsters who are constantly coming up with new schemes to trick people out of their money. In fact, the entire ICO culture failed because there were almost more scams than real projects, while hacking attacks are a constant threat when you have money on the internet.

However, scams used to be relatively easy to recognize back in the day, as long as users did a bit of backchecking instead of immediately investing. These days, both scammers and hackers tend to go a long way to try and trick people out of their money.

For example, a DeFi project Meerkat Finance recently came out claiming that it was hacked one day after launch, and that the hackers took off with $31 million in crypto assets. However, there are many who doubt this story, believing that the project is actually an exit scam, and that its team is to blame for the missing funds.

Exit scam is a type of scam where the project sells its tokens, collects as much money as possible, and then disappears, leaving investors with worthless tokens.

Skeptics Doubt Meerkat Finance’s Story

The project’s developers revealed the alleged hack this Thursday, at 9:00 UTC. They used their Telegram channel to announce that the project’s smart contract vault has been compromised and that hackers stole Binance’s two coins — BNB (around 73,653 tokens) and BUSD (13.96 million tokens). In total, the team claims that it lost around $31 million.

However, many suspect that this is not true, and that the missing funds are not a result of a hacking attack. The project’s on-chain data seems to be pointing towards the original Meerkat deployer’s account, which was used to change the smart contract. In other words, the only way this could be a hacking attack is if the project’s private key was somehow compromised.

If this is not the case, the only other explanation for the missing funds is that Meerkat itself stole them.

Binance Steps In to Investigate the Matter

Meerkat Finance was launched on Binance Smart Chain, and so Binance quickly became involved with the investigation. The exchange involved its security team, joining it with the others, in order to ‘monitor the Meerkat Finance situation,’ as its spokesperson put it.

Binance Smart Chain (BSC) is Binance’s second blockchain, launched in 2020. It is focused on smart contract programmability.

Binance’s spokesperson added that, if the money flows into the exchange, it will be frozen as soon as possible to prevent the hackers from exchanging it. However, they also added that Binance Smart Chain is an open-source ecosystem, and that Binance is not directly connected to projects built on it. In other words, it seems that even Binance is not sure what happened, indicating that anything is possible, including the fact that the theft was an inside job.

To make matters worse for itself, both Meerkat’s website and Twitter profile have disappeared, which only added more suspicion to the entire affair.