Lena Network Apologizes After $2.9M Rug Pull Allegations That Caused Candy Token Plunge

Liquidity protocol Lena Network on Wednesday apologized for the "confusion" caused by its decision to move fundraising proceeds to cryptocurrency spot and derivatives exchange OKX, clarifying that the protocol is "here to stay."

Reports that the Lena team executed a rug pull – a type of crypto scam wherein developers raise funds for a project then disappear after taking investors' funds – first emerged earlier Wednesday, when on-chain data showed that the Lena Network deployer address transferred 753.11 Ether (ETH) to an OKX-linked address. The transferred ETH was valued at around $2.9 million at the time of its transfer, as per multiple outlets.

The supposed exit scam was carried out several hours before Lena Network announced that it had renounced ownership of its Candy (CANDY) token contract. As news of the alleged rug pull spread, the token plunged over 87%, according to Cointelegraph.

In a statement late Wednesday, Lena Network apologized to the community "for any confusion or concern caused by the way we have handled certain operations." It explained that its transfer of ETH from its fundraising was made "to avoid high gas fees and swap slippage, ensuring capital efficiency and effective treasury management." It added that the funds have been primarily allocated for the protocol project's development plans.

Lena Network said it did not anticipate the community's reaction after it transferred the funds and took further steps that it deemed would safeguard the funds.

Regarding its announcement of renouncing the CANDY token's ownership contract, Lena Network clarified that "renouncing ownership of our token contract does not mean our project has come to an end."

Due to the "execution missteps" that "let down" the Lena community, the protocol project said it will implement a "compensation plan" for participants in its initial farm offering (IFO) to raise capital.

"We understand the foundation of our project is built on the trust and support of our community. It's a privilege we do not take lightly. As we move forward, we are not just committed to rectifying past misunderstandings but also to strengthening our project's governance, communication, and community engagement," Lena concluded.

The incident comes following recent rug pull events in the cryptocurrency circle that have raised concerns among crypto investors. Among such recent exit scams were gambling and exchange project RiskOnBlast (some $1.25 million in ETH taken), and Bitcoin bridge project OrdiZK (some $1.4 million in ETH funding pilfered), which were executed within less than two weeks apart.