ZachXBT Warns of $13.35 Million DeFi Losses, Urges Caution

ZachXBT, a prominent blockchain investigator, recently shared two critical checks on Telegram to help users avoid crypto scams. He emphasized that users must accept full financial responsibility if they choose to take risks in these situations, as recovering lost funds would be extremely difficult.

ZachXBT highlighted two key scenarios to be wary of. The first involves depositing funds into forked DeFi protocols on newly launched EVM chains. Many of these protocols are replicas of existing ones, with teams often forking from established protocols rather than creating original code. This process, while requiring minimal technical skills, introduces significant security risks. A recent incident involving the DeFi protocol SIR.trading, which was reportedly hacked leading to an estimated loss of $350,000, underscores these risks. Despite the project's documentation promoting it as a "new DeFi protocol for safer leveraged trading," it acknowledged the risks related to smart contract vulnerabilities. Additionally, in late March, the DeFi lending protocol Abracadabra suffered a loss of approximately $13 million due to an exploit involving collateralized tokens.

The second scenario ZachXBT warned about involves getting "rugged" by projects with few smart followers on Kaito, an AI-powered analysis tool that measures real community interest. He advised that checking followers’ numbers and quality is a basic step to avoid falling for projects that use fake engagement or empty marketing hype. Investor Xero agreed with ZachXBT, stating that Kaito can be a valuable tool for assessing credibility. "Kaito has become an amazing security and reputation tool that I value over others. It can help you identify an impersonator or a new rug project fast. If a 40k+ follower project isn’t connecting with real smart followers, it’s not legit," Investor Xero commented.

In addition to ZachXBT’s warnings, several new scam tactics have recently been flagged. Investor Jerome warned about a scheme that exploits browsers’ automatic download function to trick users into downloading malicious software. Another method involves scammers creating and sending small transactions, often as little as 0.001 tokens, using fake wallet addresses that closely resemble legitimate ones. Their goal is to deceive users into copying and pasting the fraudulent address when making future transactions. Additionally, a new remote access trojan specifically designed to target cryptocurrency wallets and login credentials has been identified.

ZachXBT’s advice underscores the importance of due diligence and caution in the crypto space. Users are advised to thoroughly evaluate the credibility of projects and be wary of new DeFi protocols and projects with suspicious follower activity. By following these critical checks, users can better protect themselves from falling victim to crypto scams.