Kannagi Finance, a decentralized yield aggregator, has rug pulled with an estimated $2.13 million of investor funds.
According to the blockchain security company, Peckshield, Kannagi Finance erased its digital footprint after bolting with more than $2 million worth of investors’ funds.
Its official website, along with social media and communication channels, are offline.
A rug pull refers to a form of scam where developers of a cryptocurrency project unexpectedly pulls liquidity from a pool, leading to sharp losses.
German blockchain security firm, SolidProof, audited Kannagi’s smart contract. However, it has clarified that it did not conduct an audit for Vault contracts related to the rug pull incident.
The company has also stated that it is investigating the matter.
Crypto tracking and compliance platform, MistTrack, also claims that 600 Ethereum (ETH) from the suspected Kannagi rug pull, valued at about $1.1 million, has been sent to the Tornado Cash crypto mixer.
Kannagi Finance is a decentralized finance (defi) platform that automates yield farming, allowing crypto investors to earn passive income via smart contracts.
It is built on the zkSync Era network, a layer 2 protocol that scales Ethereum with zero-knowledge (ZK) technology while maintaining Ethereum’s security and decentralization.
According to DeFiLlama, an analytics dashboard that tracks defi platforms, as of July 28, the total value locked (TVL) in Kannagi Finance was $2.13 million.
However, current records show a TVL of a mere $0.17, indicating a near 100% loss for users.
This incident is the latest to affect the zkSync Era network, following the $3.4 million hack of EraLend on July 25. The EraLend exploit was the first on zkSync Era since its launch in March.
The layer-2 platform is popular. At one point in June, the its TVL surpassed the $500 million mark.
However, the network’s reputation seems to have suffered following the revelation of the suspected rug pull so soon after the EraLend hack.
At the time of writing, zkSync Era’s TVL stood at $154.59 million, according to DeFiLlama. The new numbers represent a more than $345 million drop from its all-time high level.