Polywhale Finance founders accused of rug pull amid abrupt shut down

Published at: June 21, 2021

Developers of Polywhale Finance, a leading yield farm on the Polygon network, have abandoned the project in what appears to be an elaborate exit scam worth over $1 million, cryptocurrency news outlet Crypto Briefing reported Monday.

Polywhale Finance's founders are being accused of pulling a “soft rug” exit scam by selling their tokens during the latest crypto market price collapse. In a Telegram group devoted to the project, Polywhale Finance cited poor tokenomics, a negative market outlook and competition as the biggest reasons for folding. However, community members have attributed the hasty exit to malicious intent.

For starters, the official Telegram group for Polywhale Finance has been shuttered permanently, with community members increasingly convinced that the project comprised fraud. Disgruntled community members have since started a new Telegram group called "Polywhale Rugged," where the pinned message reads:

ATTENTION: THE [TREASURY] WALLET HAS BEEN DRAINED ALMOST ENTIRELY INTO THE DEV WALLET AND then 1.04 MILLION REDEEMED FROM THERE."

The Treasury wallet had 5 million tokens on June 9, according to a member by the name of "Exceptional." Earlier in the day, a community member with the handle "SK" observed that the Treasury wallet had dwindled to just 1.6 million. He was subsequently banned from the chatroom and his post deleted.

"As of 12am UTC that wallet now has ~$200,000 in it, with 1.4 million being transferred to the devs wallet at around 1655 UTC," the message reads.

On its website, Polywhale Finance claims to have more than $3.6 billion in total value locked across its entire platform. The yield farm was launched in April 2021 by an anonymous group.

Polygon has quickly emerged as one of the most popular DeFi protocols in all of crypto. As Cointelegraph reported, Polygon registered 75,000 new active users over a seven-day period during the height of the DeFi boom in May. The 1inch Network also expanded to Polygon last month in a move that boosted the aggregator’s liquidity sources. Meanwhile, Ren announced in May that it had launched a bridge to Polygon for seven leading cryptocurrencies, including Bitcoin (BTC) and Dogecoin (DOGE).

Polygon rebranded from Matic Network in February 2021 and was one of the fastest-growing projects during the bull market. Polygon’s token, which still trades under the symbol MATIC, is ranked 16th by market capitalization with a total network value of $7.6 billion.