One of the largest cryptocurrency heists in history has resulted in the return of nearly a third of the $600 million in stolen digital currencies. According to experts, the valuation of the tokens in the wallets was slightly over $600 million at the time of the news. It’s perhaps one of the most serious hacks in the decentralised finance, or DeFi, field.
According to public blockchain data and crypto monitoring firm Elliptic, roughly $258 million in stolen tokens had been restored by the late afternoon of August 10. Tom Robinson, one of the company’s co-founders, speculated that the unusual action was motivated by the difficulties of laundering stolen cryptocurrency on such a large scale.
The breach was reported on Twitter by Poly Network, a company that allows peer-to-peer transactions. The attackers took advantage of a loophole in Poly Network, which aims to connect several blockchains so that they can collaborate. Poly Network then demanded that the hackers restore the stolen cash to many of its digital addresses, threatening legal action if they did not.
The hacker then sent out a series of messages stating that they were ready to repay the stolen cash but needed the means to do it. The coins have begun to flow after Poly Network supplied addresses to transmit them to.
The number of digital currencies taken was close to the $530 million stolen from Tokyo-based exchange Coincheck in 2018. The newest attack comes as decentralised finance (DeFi) losses from theft, hacking, and fraud have reached new heights. DeFi systems allow financial transactions to take place without the need of traditional gatekeepers like banks or exchanges, generally in bitcoin.
Several hypotheses have been proposed as to how the attack was performed successfully. According to one security firm’s early research, the attacker was either able to authenticate transactions with a genuine private key or exploited a flaw to get a message confirmed. Poly Network has disputed the assertion, claiming that the attackers took advantage of contact between two contracts. Users won’t know what happened until a more thorough examination is completed, and they won’t know how much the hacker got away with until then.
The concern is why they’ve begun returning the cash and if it’s because they’re sick of people clamouring for a Robin Hood-style redistribution. The crypto community may ban the stolen tokens, rendering them useless, but the rest of them will find it difficult.
The recovery of some of the tokens demonstrates how difficult it is to launder significant quantities of stolen cryptocurrency. Some of the returned coins had a message that appeared to be a request for donations, which was delivered by a hacker or hackers. The stolen money exceeds the total criminal losses in the DeFi industry, which totaled a record $474 million from January to July. DeFi proponents claim that it provides free access to financial services to individuals and companies, claiming that the technology would reduce costs and promote economic activity.
According to a recent study, cryptocurrency-related breaches and fraud have increased in the first seven months of this year. DeFi-related incidents cost $361 million from January to July, roughly three times what they cost for the entire year of 2020. It accounted for 54% of overall crypto fraud volume in the first months of this year, compared to 3% for the entire previous year.
Closing Note
The CEO of prominent cryptocurrency exchange Binance says he is aware of the incident and is working with security partners to respond quickly, but that no promises can be made. For cryptocurrency investors, it’s necessary to be constantly aware of the risk that the cryptocurrency market presents. According to the stablecoin’s issuer, about $33 million in Tether has been frozen as a result of the heist. For users interested in this developing story, it is advised that you go on to Poly Network’s Twitter account for the newest updates.
