HatchDAO joins a growing list of projects that have taken advantage of investors’ interest in the decentralized finance (DeFi) space to embezzle their money.
When a few days later, HatchDAO carried out an exit scam by withdrawing liquidity from the pools and removing all communication channels, accusations fell on TrustSwap. Community members claim that startup guarantees created a false sense of security in them and were used as a means of drawing attention to a fraudulent proposal.
A service provider, wrote on September 19:
“This is where the complexities of cryptocurrencies show their nasty side,” writes crypto blogger Boxmining. “Trustswap blocked the assets of the team, but the fraudsters from HatchDAO withdrew liquidity.”
TrustSwap, for their part, said their service worked flawlessly. The company notes that there are at least four ways to perform an exit scam: sell team tokens, withdraw liquidity, issue additional tokens, or change the contract code. TrustSwap guarantees only cover the first case.
“Just as closing the door does not guarantee the safety of the house, blocking TrustToken does not guarantee the impossibility of withdrawing liquidity,” added TrustSwap CEO Jeff Kirdeikis.