LENX Protocol Under Scrutiny Amidst Allegations

LENX is at the center of circulating rumors on social media regarding a suspected rug pull involving its liquidity protocol.

Social media platforms are overflowing with rumors of a slow rug pull involving the liquidity protocol LENX as the community conjectures over mysterious transfers of tokens valued at millions of dollars. 

Anonymous X users AstroBoy and Etherscan data claim that the creators of LENX Finance, John Kim and a man only known as Paul, drained the LENX wallets by transferring over $10 million in Treasury assets to a Binance account for no apparent reason.

Since the first notice of the transactions on March 26, users have lamented the lack of communication on the protocol’s Discord server. They have also complained about regular transfers to Binance and notifications regarding the removal of the suspicious withdrawals.

The protocol was introduced in January 2024 with the goal of enabling native Bitcoin lending or yield generation. LENX XD (XD), the native token of the company, was worth $0.26 in early January, compared to $0.02 at the time of writing, according to CoinGecko. FRAX Finance, a lending protocol, supports LENX.

When the media contacted LENX Finance’s two co-founders, they did not hear back right away. There was no response from the FRAX Finance team.

Kim apparently had a chat with Flywheel DeFi, a media firm, but the co-founder opted not to speak. Kim wrote, “Sorry, I don’t have much to say right now.” Paul last used Discord on March 26, at which point he declared he was looking into the withdrawals. “I’m attempting to look into this right now.”

Discord users have reported that the LENX team managed to lock the money’s Binance account, protecting the remaining $3 million. Kim’s actions are apparently the subject of an ongoing inquiry, and Paul is assisting with legal proceedings.

A scam known as a “rug pull” occurs when developers abruptly remove all of the money from a project or liquidity pool, leaving investors with tokens or assets that have no value.

The Federal Bureau of Investigation (FBI) revealed in 2023 that losses from crypto-related investment fraud in the US had increased significantly, from $2.57 billion in 2022 to roughly $3.94 billion, a 53% rise.