At 3 a.m. on August 6, a red alert on the blockchain browser pierced the calm of the crypto market— the Jubi exchange AJE token fund pool plummeted by 98.7% in 10 minutes, with assets worth 1.6 billion yuan seemingly evaporating. This so-called 'milestone of blockchain 3.0' 5M protocol ultimately revealed its fangs: a financial hunt wrapped in code that turned the hard-earned money of tens of thousands of families into ashes. One, beneath the guise of technological innovation lies a meticulously designed death spiral. Three months ago, images of Jubi's CEO passionately speaking at the Dubai Blockchain Summit were still circulating: 'Dynamic staking mining will reconstruct the DeFi ecosystem!' Over 110,000 investors were lured into the trap by an annualized return of up to 365%, unaware that they had already stepped into a carefully designed trap.
1. Centralization of computing power: A breeding ground for Ponzi schemes
The audit report from Slow Fog Technology shows that the computing power centralization index of the 5M protocol is as high as 0.78, far exceeding the industry safety threshold of 0.3. This means that the top 10% of nodes control 78% of the total network's computing power, allowing the project party to tamper with transaction records and manipulate prices at will. 'This is like a casino owner controlling both the dice and the chips; the players can never win.' Professor Zhang Mingyu from the Central University of Finance and Economics pointed out when analyzing the flow of funds that this design essentially uses the principal of new investors to pay the returns of old investors, and once the funding chain breaks, the system will automatically activate the 'self-destruction program.'
2. Recursive call vulnerabilities: ATMs in the code
Even more deadly is the recursive call vulnerability in smart contracts. Simply put, the project party can transfer assets from the entire fund pool instantly by bypassing any funding restrictions through infinite recursive function calls. On-chain data shows that 47 million AJE were transferred to the Tornado Cash mixer in batches within 24 hours before the crash, thoroughly laundering the funds through multiple layers of nested transactions. 'This is not a technical failure but a long-planned harvesting program.' A blockchain security expert found that the vulnerability was deliberately retained and even left sarcastic remarks in the comments: 'Thank you for your trust, see you next time.' Two, when the myth of wealth breaks: From millionaire to heavily indebted beings. In the trading records of Ms. Zhang from Beijing, the principal of 300,000 once rose to 480,000, but now only a string of zeros remains. She trembles as she shows her daughter's university admission notice: 'This is the tuition she has been looking forward to for 18 years!' Such stories abound in the victims' community:
• Mr. Wang from Hangzhou, who mortgaged his house to invest 1.7 million retirement funds, now faces homelessness; • A post-90s entrepreneur in Shenzhen gambled 600,000 in wedding savings, turning wedding invitations into debt collection notices; • A couple of farmers in Hebei saved 280,000 over eight years, but after the collapse, they had to pick up their hoes again.
Even more chilling is the collective closure of rights protection channels. The last announcement from the official Jubi community was on August 6 at 5:17: 'The technical team is working hard to fix it,' while at that time, the project party's associated wallets had completed the last three transactions totaling 8 million dollars. 'They recorded the evidence of crime with the immutability of blockchain, yet cut off all paths to redemption with centralized means,' said the head of the securities team at Beijing Weihe Law Firm, noting that the international litigation group has collected 3.2GB of on-chain evidence, including fund flows, code vulnerabilities, and community brainwashing records. Three, regulatory awakening and industry reflection: When financial innovation detaches from the real economy. Seventy-two hours after the crash, a key turning point occurred: Hainan police launched an investigation into Jujian Technology, the Monetary Authority of Singapore froze accounts of related companies, and the Securities Regulatory Commission received evidence packages submitted by victims. This is one of the largest international law enforcement actions in the cryptocurrency field in recent years, but experts point out that this is just the tip of the iceberg.
1. The cost of regulatory lag
The warning from Di Gang, deputy director of the Central Bank Digital Currency Research Institute, still echoes: 'Any financial innovation that detaches from the real economy will ultimately be an illusion.' The 5M protocol is precisely exploiting regulatory gaps to package Ponzi schemes as technological revolutions. 'They registered companies overseas, used USDT as a funding channel, and avoided tracking through mixers; the entire process is a textbook-level criminal model.' The Financial Action Task Force (FATF) report shows that the amount of fraud related to stablecoins exceeded $51 billion in 2024, while regulatory agencies often take months to trace fund flows.
2. The lack of industry self-discipline
Interestingly, a certain 'blockchain tycoon' who once supported the project has quietly deleted all related tweets. This kind of 'scam and run' act is not uncommon in the crypto space, but this incident exposes a deeper issue: the industry lacks a basic moral bottom line. 'When technology is used for evil, code becomes a weapon.' The CEO of blockchain security company Certik pointed out that smart contract auditing, KYC/AML mechanisms, and investor education are the three main lines of defense to prevent similar tragedies, but currently, the industry is almost in a vacuum in these aspects. Four, the lesson for survivors: covering your wallet is more important than opening your wallet. On the blockchain, the 1.6 billion yuan transaction records can never be tampered with; they stand like invisible tombstones, inscribing the most expensive lessons of this crazy era. For investors, the following three points are crucial:
1. Beware of high-yield traps: Any project promising 'capital preservation and interest' is essentially a Ponzi scheme. 2. Verify technical details: Require the project party to publicly disclose the smart contract code and undergo third-party audits. 3. Diversify investment risks: Never put all your savings into a single asset, especially cryptocurrencies lacking real-world backing.
Conclusion
The original intention of cryptocurrency is decentralization and financial freedom, but when it becomes a tool for harvesting, we must reassess the boundaries between technology and humanity. The collapse of Jubi AJE is not the end but a wake-up call—maintaining rationality and vigilance in this tempting field may be more important than chasing wealth.
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