Risks of unspecified transfers on the LENX protocol Spark carpet
As the community speculates about millions of dollars worth of tokens being moved for no reason, the slow carpet drag liquidation protocol LENX is flooding social media channels.
According to data from X user AstroBoy and Etherscan, the founders of LENX Finance, John Kim and a man known simply as Paul, transferred more than $10 million worth of treasury assets to Binance accounts for no apparent reason.
On the protocol's Discord server, users have complained about a lack of connectivity since the transactions first appeared on March 26, with a series of transfers to Binance and messages about suspicious withdrawals.
The protocol was launched in January 2024, promising to generate or borrow native bitcoins. According to CoinGecko, LENX's native token LENX XD (XD) was valued at $0.02 at the time of writing, compared to $0.26 in early January. LENX is supported by the lending protocol FRAX Finance.
Cointelegraph reached out to both LENX Financial founders and did not receive an immediate response. FRAX Finance Group was not available for comment.
Media company Flywheel DeFi has reportedly been in talks with Kim, but the co-founder declined to comment. “Sorry, I don't have much to say right now,” Kim wrote. Paul's last Discord activity was on March 26, when he announced that he was investigating his exit. “I'm trying to investigate now.”
According to reports on Discord, the LENX team was able to block the Binance account that received the money, which was protected by $3 million in balances. An ongoing investigation into Kim's activities is reportedly underway, with Paul cooperating with legal efforts.
A carpet drag is a type of scam where developers suddenly withdraw all funds from a project or liquidity pool, leaving investors with worthless tokens or assets.
In the year In 2023, the Federal Bureau of Investigation (FBI) reported a significant increase in crypto-related investment fraud in the United States. A loss of $2.57 billion to $3.94 billion in 2022, an increase of 53%.
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