Shade Network Faced Scam Allegations Amid Privacy Layer-2 Launch Scrutiny

Shade Network: Privacy-Focused Ethereum Layer-2 Faces Scrutiny

Shade Network, a new privacy-focused Ethereum Layer-2, is facing allegations of scamming and phishing activities. Critics are warning about its alleged connections to a previous rug-pull scheme that drained investors of $1.8 million. These concerns have led to multiple security warnings from wallet providers.

The project claims to offer encrypted transaction execution and protection from MEV and front-running. However, it has yet to launch a live network or token. The visible progress includes a waitlist and early branding materials. No testnet code, audits, or technical documentation have been publicly released.

Analysts have urged investors to avoid interacting with Shade Network's wallet until independent verification and transparency improve. The controversy has escalated quickly, with public retractions from early promoters. While the project has not confirmed any wrongdoing, the allegations have raised serious questions about user safety.

Why the Move Happened

The allegations against Shade Network stem from previous interactions with an earlier project that was accused of conducting a rug pull. Critics claim that participants lost funds through a malicious claim link that drained wallets. These concerns have led to heightened scrutiny of the new project.

Several wallet providers have flagged Shade Network's website as potentially harmful. Wallet security warnings usually appear when phishing scripts or malicious contract interactions are detected. This has further deepened investor concerns.

How Markets Responded

Despite the ongoing scrutiny of Shade Network, other parts of the crypto market have shown resilience. Investors have poured $32 billion into US crypto ETFs as of the end of 2025. The iShares Ethereum Trust ETF (ETHA) leads the market with inflows of almost $12.6 billion according to recent reports.

Bitcoin and Ethereum ETFs have shown little renewed demand over the past month. Analysts predict that while more than 100 crypto ETFs could be approved in 2026, many may not last beyond 2027 due to a lack of demand.

What Analysts Are Watching

Analysts are closely monitoring whether Shade Network will provide additional transparency and verification. The project's roadmap includes a full team reveal and roadmap, but no testnet or technical documentation has been released.

The lack of technical documentation and testnet code raises concerns about the project's legitimacy. Analysts suggest that independent verification and transparency are essential for investor confidence.

Market observers are also watching for further developments in the DeFi space, including the launch of Mutuum Finance's V1. The project has finalized core lending features and plans to support stablecoins and Layer-2 integration.