SwirlLend Scandal Erupts as Base Faces Security Concerns and Crypto Losses

Coinbase's recent addition, Base, experienced troubling times within just a week of its operation. SwirlLend, previously known for its activity on Base and Linea, has allegedly pulled off a major cryptocurrency heist, leading many to suspect an exit scam.

On August 16, PeckShield disclosed on X (previously Twitter) that SwirlLend siphoned off cryptocurrencies amounting to nearly $289,500 from Base. The crypto lender didn't stop there. It moved 94 Ether (ETH) from Linea, connecting it directly to the Ethereum blockchain. Following these transfers, SwirlLend unveiled a new token and discreetly funneled 253.2 ETH using the Tornado Cash crypto mixer.

SwirlLend's digital footprint vanished almost immediately. Their social media accounts went dark, and their website became inaccessible. The dramatic fall of their locked value on Base from $784,300 to a mere $49,200 further fueled suspicions.

SwirlLend's dubious activities came shortly after RocketSwap, a decentralized exchange on Base, reported a staggering $865,000 loss. Prior to this event, the BALD coin plummeted by 85% in value on July 31 due to questionable developer actions.

Solidus Labs, a crypto trade surveillance entity, raised alarms regarding Base's security. Their investigations unearthed over 500 potentially scam tokens on the platform. Shockingly, 300 of these tokens possessed concealed functionalities to produce unlimited tokens. Furthermore, 70 harbored concealed transaction costs, while 60 prevented token holders from offloading their acquisitions.

These nefarious activities have led to losses amounting to around $2 million in crypto. Solidus Labs estimates that deceptive schemes like the BALD incident further deprived users of $5.2 million.

Coinbase responded to these concerns, emphasizing the unrestricted and transparent essence of Base. They urged users to exercise caution and conduct in-depth research before diving into any decentralized application, whether on Base or elsewhere. To combat these rising issues, Coinbase is also in the process of crafting an open-source monitoring device, named Pessimism. This tool is designed to promptly identify irregularities within the protocol and network.

Coinbase introduced Base, an Ethereum-centric platform, in February. The company started integrating developers on July 13 and extended its services to general users on August 9.

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