StableMagnet Exit Scam

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StableMagnet

With an anonymous team, StableMagnet built a large complex smart contract, which promised a platform to trade with low slippage and fees.

In reality, they were using a malicious library which included some code that later allowed them to take control of all user funds, including both the liquidity pool and additional funds that some users may have had in their wallets, and given the contract permission to access.

No audit was done, and users who participated in the project could not reasonably look at all the dependencies and determine that there were issues. As a result, many users lost all their invested funds.

This is a global/international case not involving a specific country.

About StableMagnet

"Stable Magnet [was] a newly launched Farming Protocol on Binance Smart Chain. [It was a] stablecoin focused AMM protocol where users c[ould] trade with low slippage and fees. Stable Magnet launched with 3pool liquidity including BUSD, USDT and USDC, to provide main trading support for widely used stable pegged assets."

"Earn passive income with low risk stablecoin pegged assets. The Stable Magnet special stable swap algorithm which is designed for assets pegged to same value. You only need to pay 0.035% (lowest fee on binance smart chain) to swap USD on their website."

RugDoc described that the project was "Complex custom code based on Belt.fi/saddle.fi – very similar to Dopple, with manual minting removed. A new project with lots of complex code means a lot of opportunity for bugs/exploits. Needs a pro audit and bug testing."

"A few hours before the attack, [Rekt] received a message from an anonymous source suggesting that StableMagnet would rugpull. We couldn’t verify the claims, so our hands were tied."

"StableMagnet rug pulled over $22 million worth of assets. The scammers swap their SwapUtils library for their swap contract to an unverified linked library. They used code in the unverified linked library to drain all tokens from the swap contract. We recommend users unstake and revoke token approvals."

"StableMagnet owners rug pulled $27M using a backdoored library. Interestingly, the scam takes advantage of a weakness in Etherscan-based explorers which do not verify linked library source code."

"The rugpull from StableMagnet came thanks to a novel attack method. The problem cited by Rugdoc is that neither Etherscan nor BscScan verify linked library source code. This allowed the scammers at StableMagnet to deploy a different code library than the one cited in the source code. In this manner StableMagnet’s SwapUtils library wasn’t checked."

"RugDoc said, “The unverified linked library did not only contain code to drain all pairs, it also contained code to transfer more tokens to everyone who had approved StableMagnet. Please revoke your approvals as soon as possible using debank.com... Dopple and StableGaj are based upon the same protocol and their SwapUtils libraries are also UNVERIFIED. For the time being we recommend UNSTAKING and REVOKING APPROVALS until these contracts are verified.”"

"The BSC on-chain project StableMagnet ran away and lost USD 22 million." "StableMagnet [then started] draining funds directly from user wallets - if you have interacted with StableMagnet at all you must revoke all permissions now."

"PeckShield stated, “StableMagnet Swap has been approved by many users to move funds: If you interacted with it before, REVOKE NOW”, before estimating that a huge number of users could still be at risk. “Our calculation shows there are still 1000+ users who have non-zero allowance on the rugpulled StableMagnet.”"

"At present, the websites and social media handles of Stablemagnet are not on the server and subsequently down."

"They used the Any Swap Network, a notorious network for rug pulling, to remove the money within the twinkle of an eye."

"An anonymous source which spoke to REKT claims that the people behind the StableMagnet rugpull have also been behind a number of other similar crimes including Moon Here and WenMoon. There is no further way to corroborate that information at this time. Victims of the rugpull have now formed a community support group on Telegram and are seeking to piece together what information they can about the scammers."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - StableMagnet Exit Scam

Date	Event	Description
June 23rd, 2021 12:00:00 AM	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost has been estimated at $27,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Prevention Policies

There are a number of ways to prevent this issue.

Having an anonymous team removes any incentive to avoid scamming users, as the team or individual can get away with impunity.

Storing assets in a smart contract hot wallet is not ever as secure as assets which are stored in offline multi-signature wallets. Having a multi-signature wallet held by multiple trusted competent individuals would have prevented any one person from taking the funds.