{"investigation":{"slug":"magnate-finance","entity_name":"Magnate Finance","trust_score":2,"severity_base":null,"score_modifier":0,"confidence":1,"status":"published","content_type":"investigation","summary":"Magnate Finance was a DeFi lending and borrowing protocol deployed on Coinbase's Base Layer 2 network that executed an exit scam on August 25, 2023, stealing approximately $6.4–6.5 million in user funds by manipulating its price oracle. On-chain investigator ZachXBT issued a public warning hours before the rug pull, having traced the deployer address to at least two prior exit scams: Solfire ($4.8M, January 2022) and Kokomo Finance ($5.5M, March 2023), establishing this as the work of a repeat-offender scam ring responsible for over $16.7 million in total losses.","sections":[{"content":"Magnate Finance presented itself as a decentralized lending and borrowing protocol operating on Base, Coinbase's Ethereum Layer 2 network, which launched publicly on August 9, 2023. The protocol attracted over $6.4 million in total value locked (TVL) within weeks of Base's mainnet debut, positioning itself as a yield-bearing lending platform. The protocol's native token was ticker MAG. Magnate Finance is the third known rug pull on the Base network. Like other protocols later connected to this scam ring, Magnate Finance used a Compound V2 fork architecture and used audit claims and falsified KYC documentation to project legitimacy.","heading":"Protocol Overview","sources":[],"severity":"medium"},{"content":"On August 25, 2023, the Magnate Finance team executed an exit scam against its users. The attack was carried out by modifying the protocol's price oracle address — the contract responsible for reporting asset prices to the lending system — to a malicious oracle the team controlled. By manipulating the reported prices, the attacker was able to artificially inflate collateral values and borrow all remaining assets from the protocol's liquidity pools. The exploit transaction hash is 0x39555e75d76b294248a434fdfe9640e0cfe3f22bd7fceb675fd4ef4b5e02f719. Assets drained included approximately $2 million in USDbC, $1.56 million in ETH, $1.3 million in DAI, and $408,000 in WETH, among others. The protocol's MAG token collapsed over 86–90% immediately following the event. Within hours, the Magnate Finance website went offline, the project's Telegram group was deleted, and all associated social media accounts on X (formerly Twitter) were deactivated.","heading":"The Rug Pull — August 25, 2023","sources":[],"severity":"medium"},{"content":"Blockchain investigator ZachXBT issued a public community alert on August 25, 2023, via X (formerly Twitter), warning that Magnate Finance on Base would likely exit scam in the near future, at which point the protocol held over $6.4 million in TVL. ZachXBT identified that the deployer address for Magnate Finance was directly linked to the Solfire $4.8 million exit scam. The warning was published hours before the rug pull was executed. The ZachXBT post is available at: https://x.com/zachxbt/status/1694914871165345997. Despite the public warning, the scammers proceeded with the rug pull, suggesting the timing of the alert and the execution were nearly simultaneous. Some users were able to respond to the warning, though the protocol's website vanished within an hour of the funds being moved.","heading":"ZachXBT Pre-Rug Warning","sources":[],"severity":"medium"},{"content":"The Magnate Finance deployer address (0x4bdac0b6eeda6211f43178899cb73670b1952c40) was identified on-chain as the same entity responsible for at least two prior exit scams. The first was Solfire, a DeFi protocol that rug pulled users for $4.8 million in January 2022. The second was Kokomo Finance, a Compound V2 fork operating on the Optimism network, which exit scammed on March 27, 2023, stealing approximately $5.5 million. The combined total across Solfire, Kokomo Finance, and Magnate Finance alone is approximately $16.7 million. ZachXBT's investigation further identified connections to additional projects in the scam ring, including Lendora (on Scroll), Leaper Finance (on Blast), Glori Finance, ZebraDAO, Hash DAO, HellHoundFi, and Crolend. These protocols collectively operated across Base, Solana, Scroll, Optimism, Arbitrum, Ethereum, and Avalanche. The group's methodology was consistent: allow TVL to grow to seven figures before draining all user funds, use falsified KYC documentation, and engage low-tier audit firms to project legitimacy.","heading":"Deployer Address and Linked Scams","sources":[],"severity":"medium"},{"content":"Following the Magnate Finance rug pull, the scammers moved funds across multiple chains to obscure the trail. Approximately $1.34 million worth of DAI was transferred to a new address. An additional $1 million in USDT was bridged to the BNB Smart Chain via Stargate bridge. Further funds were bridged to Arbitrum and Optimism. Stolen assets were held at Base addresses 0xa146dffe1c304a8a3de74c460ffe8dc73e5ce6e1 and 0x0664faf5afecde5958d8b32258e012c3788006a3 in the immediate aftermath. The group subsequently used laundered proceeds from Magnate Finance and prior scams to seed Leaper Finance on Blast with approximately $1 million in liquidity, creating the appearance of an organic protocol to attract new victims — a tactic ZachXBT later exposed. Following ZachXBT's continued exposure of Leaper Finance and Glori Finance as further iterations of the same ring, those projects' X accounts were also deactivated and websites taken offline.","heading":"Fund Movement and Laundering","sources":[],"severity":"medium"},{"content":"The Magnate Finance rug pull occurred within weeks of the Base network's public mainnet launch (August 9, 2023), a period when new protocols were launching rapidly with minimal established vetting. Security firm Solidus Labs identified over 500 fraudulent tokens on Base during this period, including approximately 300 with unlimited supply capabilities and 60 that prevented token resale. Magnate Finance was the third known rug pull on Base at the time of the incident. The incident highlighted systemic risks in the early Base ecosystem, including insufficient audit standards, the ease of deploying Compound V2 forks with backdoored oracle contracts, and the speed at which TVL could accumulate before on-chain investigators could issue actionable warnings.","heading":"Broader Context: Base Network Security","sources":[],"severity":"medium"}],"timeline":[{"date":"2022-01-23","event":"Solfire DeFi protocol exit scams users for $4.8 million. Deployer address later linked to Magnate Finance.","source":"","source_url":"https://coingape.com/magnate-finance-deployer-exploited-17-mln-from-multiple-rug-pulls/"},{"date":"2023-03-27","event":"Kokomo Finance, a Compound V2 fork on Optimism, rug pulls users for approximately $5.5 million. Same deployer address identified.","source":"","source_url":"https://coingape.com/magnate-finance-deployer-exploited-17-mln-from-multiple-rug-pulls/"},{"date":"2023-08-09","event":"Coinbase's Base Layer 2 network launches publicly. Magnate Finance begins attracting TVL shortly thereafter.","source":"","source_url":"https://coinedition.com/lending-protocol-magnate-finance-rug-pulls-exits-with-6-5-million/"},{"date":"2023-08-25","event":"ZachXBT issues public community alert on X: 'Magnate Finance on Base will likely exit scam in the near future currently with over $6.4M TVL. The deployers address is directly linked to the Solfire $4.8M exit scam.'","source":"","source_url":"https://x.com/zachxbt/status/1694914871165345997"},{"date":"2023-08-25","event":"Magnate Finance executes exit scam: oracle address manipulated, ~$6.4–6.5 million in user funds drained. Website goes offline, Telegram deleted, X accounts deactivated.","source":"","source_url":"https://www.theblock.co/post/247375/magnate-finance-rug"},{"date":"2023-08-25","event":"Scammers transfer $1.34 million DAI to a new address and bridge $1 million USDT to BNB Smart Chain via Stargate. Funds also routed to Arbitrum and Optimism.","source":"","source_url":"https://blockchainreporter.net/base-blockchains-magnate-finance-rug-pulled-users-for-6-4m-bridged-1m-usdt-to-the-bnb-chain/"},{"date":"2024-04-14","event":"ZachXBT exposes Leaper Finance on Blast as a new project seeded with approximately $1 million in laundered funds from prior Magnate Finance and related scams. Leaper Finance and Glori Finance accounts deactivated following exposure.","source":"","source_url":"https://www.binance.com/en/square/post/2024-04-14-scam-team-launches-new-project-on-blast-after-stealing-millions-6743766601282"}],"sources_used":[],"source_tags":["zachxbt","defillama"],"addresses":[],"reviewed":false,"reviewed_by":null,"model_used":"claude-sonnet","created_at":"2026-05-04T02:54:38.637893+00:00","updated_at":"2026-08-29T01:35:09.981+00:00"}}