Binance, the leading cryptocurrency exchange, has helped recover nearly all of the funds stolen due to an exit scam by an automated market maker (AMM) called Wine Swap.
Binance Security Team Recovers 99.9% of Stolen Funds
In a press release shared with Crypto report, the popular exchange shared that Wine Swap was launched on Binance Smart Chain as an AMM platform on October 13, 2020. However, just an hour after the product launch, the team behind it “pulled the rug”, taking more than $ 345,000 in client funds.
Binance identified the Wine Swap team only by their on-chain BSC addresses and saw a total of 19 different tokens sent to 119 different addresses.
"When the exit scam was executed, the funds remaining in the contract (0xa1eaB5F255DD77fED0D8ea81748422ca7ab0eDc4) were transferred to the creator's address (0x4BA023aA9196a354C008aD595F67e268420b7005)," the statement read.
Binance's security team followed the transactions and noted that a small portion ended up on two digital asset exchanges. At this point, almost all of the funds had already been converted to stablecoins, Binance Coin (BNB), Ethereum (ETH), and Chainlink (LINK).
On October 14, the security team identified and contacted the author of the plan. According to Binance, the undisclosed scammer "was quick to cooperate in an attempt to avoid impending consequences."
As such, the security team worked alongside the perpetrator and recovered 99.9% of the $ 345,000 initially stolen. The exchange claimed that the funds had been reconverted to the original tokens and that all affected users will receive them in the coming days.
Lessons to learn
Binance's statement highlighted several conclusions from the development described above. The decentralized finance ecosystem (DeFI) has been booming in recent months. However, this massive growth has made it difficult to "verify the legitimacy of each and every project."
Although the security team promised to address each challenge, it urged investors to be even more cautious in their research before allocating funds to various projects.
Despite the successful recovery of Wine Swap funds, the publication also admitted that similar happy endings with scams are "very rare."
Lastly, Binance outlined the crucial roles of its security and finance teams and the two exchanges that frozen funds from the scam.