Crypto investigator ZachXBT has raised concerns about Sorta Finance, a newly launched DeFi lending protocol on the Arbitrum network, labeling it a potential exit scam and linking it to a notorious group of criminals. According to his findings, Sorta Finance shares characteristics with previous fraudulent schemes such as Magnate Finance, Solfire, and HashDAO.
These schemes typically involved cloning Compound’s lending smart contract on Ethereum Virtual Machine-compatible blockchains. The perpetrators would then freeze the protocol and siphon off user funds from the total value locked. ZachXBT pointed out that these malicious actors often gained credibility on EVM-compatible chains by securing endorsements from dubious audit firms and paying lower-tier crypto influencers to promote their platforms, a practice known colloquially in the crypto community as “shilling.”
Additionally, ZachXBT noted that an early transaction involving Sorta Finance was funded by a withdrawal from Tornado Cash, a crypto mixer sanctioned in the U.S. for obscuring the origins of transactions, which has been frequently used by criminals to launder money.
As of July 25, Sorta Finance reported under $100,000 in total value locked (TVL). However, ZachXBT warned that similar schemes orchestrated by the same group have previously amassed millions in user deposits. He estimated that the culprits behind Sorta Finance and related scams have netted over $25 million to date.
ZachXBT’s analysis underscores a growing trend in the crypto sector aimed at preempting blockchain-related crimes. There is an increasing focus on enhancing on-chain security through public vigilance and collaborative efforts. Initiatives like Coinbase’s and SEAL 911’s formation of Information Sharing and Analysis Centers (ISAC) are pivotal in pooling data about hacks, malicious activities, and criminal operations to bolster the security of the DeFi ecosystem.
