SwirlLend rugs on new Coinbase layer 2 Base as large number of scammers reported

SwirlLand is just the latest scam, but Coinbase tells Cointelegraph it is developing a monitoring tool to warn users of anomalies.

Base, Coinbase’s new layer 2, has been fully operational for a week and has already seen an influx of bad actors. In the latest incident, crypto lender SwirlLend, formerly active on Base and Linea, has apparently carried out an exit scam, otherwise known as a rug pull. 

PeckShield reported in a post on X (former Twitter) on Aug. 16 that SwirlLend transferred around $289,500 worth of cryptocurrency from Base. It later transferred 94 Ether (ETH) from Linea as well, bridging the crypto to Ethereum. It then created a new token and laundered 253.2 ETH through the Tornado Cash crypto mixer.

SwirlLend has shut down its social media accounts and website. Its total value locked on Base has fallen from $784,300 to $49,200.

Related: Coinbase layer-2 network Base hits 136,000 daily active users

The SwirlLend rug pull came two days after Base project RocketSwap, a decentralized exchange, experienced an $865,000 exploit. Before that — and even before the platform was officially open to the public — the BALD coin lost 85% of its value on July 31, after the developer “added/removed 2 sided liquidity and bought.”

Scam Alert

Beware of suspicious activities involving @SwirlLend, a lending/borrowing protocol on Linea and Base.

Background investigation has shown that a team member impersonated our CSO months ago, by adopting his Telegram username and profile picture. This unethical…

— SolidProof.io Official (@SolidProof_io) August 5, 2023

There may be more trouble ahead for Base, judging from a blog post by crypto trade surveillance service Solidus Labs. The company found more than 500 scam tokens on Base, it reported. Among those were 300 tokens with hidden functions to mint unlimited numbers of tokens. Also, 70 contained hidden transaction fees and 60 would not allow buyers to resell their tokens.

Scammers have made off with $2 million worth of crypto so far, according to Solidus. That was in addition to “soft” rug pulls such as BALD, which Solidus Labs estimated cost users $5.2 million.

“Given the permissionless and open nature of Base, we expect to see various types of projects built on the network,” a Coinbase spokesperson told Cointelegraph. “We encourage consumers to do their research diligently before participating in any dapp, on Base or any other chain. [...] To help enhance the security of the Ethereum ecosystem as a whole, we are developing an open source monitoring tool, Pessimism, to provide prompt notification of anomalies in the protocol and network.”

Coinbase announced the launch of its Ethereum-based Base in February. It began onboarding developers on July 13 and opened the platform to users on Aug. 9.

Magazine: QuickSwap founder: L2s are the path to mass adoption

This article was updated at 21:30 UTC , August 16, to include the statement from Coinbase.