Social media platforms are abuzz with speculation about potential fraudulent activity within the liquidity protocol LENX, as reports indicate large token transfers worth millions of dollars without clear explanation. According to findings from pseudonymous user AstroBoy and data from Etherscan, LENX Finance's founders, John Kim and an individual known as Paul, transferred over $10 million in treasury assets to a Binance account, leading to the depletion of LENX wallets.

Concerns about the lack of communication from the project team arose after these transactions were observed on March 26, with users on the protocol's Discord server expressing dissatisfaction over the consistent transfers to Binance and the removal of messages regarding the suspicious withdrawals.

Launched in January 2024, LENX promised support for native Bitcoin for yield generation or borrowing against it. CoinGecko data shows that LENX's native token, LENX XD (XD), was valued at $0.26 in early January, compared to $0.02 at the time of reporting. LENX is supported by the lending protocol FRAX Finance.

Cointelegraph attempted to contact both LENX Finance co-founders but did not receive an immediate response, while the FRAX Finance team was unavailable for comment. Flywheel DeFi, a media company, reportedly communicated with Kim, who declined to provide a statement, citing a lack of information. Paul's last activity on Discord was on March 26, where he mentioned initiating an investigation into the withdrawals.

Discord reports suggest that the LENX team managed to freeze the Binance account receiving the funds, with $3 million still secured. An ongoing investigation is underway regarding Kim's actions, while Paul is said to be cooperating with legal proceedings.

A "rug pull" is a fraudulent scheme in which developers abruptly withdraw all funds from a project or liquidity pool, leaving investors with worthless assets or tokens.

In 2023, the Federal Bureau of Investigation (FBI) reported a significant increase in crypto-related investment fraud in the United States, with losses rising from $2.57 billion in 2022 to approximately $3.94 billion, representing a 53% increase.