A recurring problem in the crypto sector is wallet hacks, with some incidents related to large platforms and sometimes enormous sums of money in the form of crypto assets being stolen. Despite the high-profile cases, it remains to be seen how this problem will be addressed. However, with institutional market entry and regulatory compliance a priority, such a situation is unlikely to continue.
Data and images from chain analysis
Binance linked wallet hacked
Earlier this month, it was widely reported that a crypto wallet for USDT (that’s the Tether stablecoin) worth around $27 million in total was hacked, and what was notable besides the big numbers was a connection to the Binance exchange .
The stolen funds were withdrawn from Binance, and according to on-chain data, the hacked wallet was able to be reconnected to a Binance Deployer wallet via a transaction from 2019.
Although this suggests a connection between Binance and the victim of the hack, the exchange has not provided any further information on this apparent connection and there have been no further updates on the Binance security team’s findings, according to a previous comment from a Binance spokesperson “investigated the matter.”
Continue reading
This reflects how crypto has worked so far, with security breaches being part of the landscape, but there may be larger, significant changes coming.
This week, Binance was fined $4.3 billion by the Justice Department, while founder Changpeng Zhao resigned from his position as CEO and pleaded guilty to felony charges. These developments mean that Zhao will be banned from having any operational involvement in Binance for a period of three years and that the exchange will be monitored by an independent compliance monitor.
When it comes to centralized exchanges, regulatory compliance could come to the fore.
The Poloniex hack
Shortly before news of the Binance Connected Wallet hack broke, there was another significant breach on the Poloniex exchange, which was partly due to Tron founder Justin Sun becoming a major investor in 2019.
Last month, Poloniex was hacked to loot around $125.6 million worth of tokens, with the funds flowing primarily through three networks: Ethereum, Tron and Bitcoin. In response, the platform offered the hacker a 5% bounty in exchange for refunding the funds.
As a result, Poloniex announced this week that it had determined the hacker’s identity and posted an on-chain message in fifteen languages to the suspected perpetrator, announcing that a final $10 million bounty had been placed be. This is associated with a deadline of November 25th, after which the law enforcement authorities should be involved.
It’s an exciting turn of events worthy of a Netflix drama, but has been met with some skepticism in the online crypto community that questions the veracity of what happened.
dYdX and Curve offer rewards
The use of bounties to pursue evildoers is not new, as dYdX demonstrated earlier this month. In this case, however, it was not a hacker attack, but rather an accusation of price manipulation, as the price of Yearn Finance’s YFI token was apparently manipulated via the decentralized trading platform dYdX, resulting in losses of around $9 million the dYdX insurance fund.
This has led to dYdX announcing that bounties will be offered to anyone who can significantly contribute to the search for the suspected market manipulator, although the matter has not yet been resolved.
On-chain news is another recurring theme, as happened after Curve Finance was hacked for around $73 million in late July, an attack that also resulted in losses for DeFi platforms Metronome and Alchemix through their liquidity pools on Curve led.
In exchange for returning the stolen crypto assets, the hackers were promised a 10% bounty and an offer not to involve law enforcement, but the DeFi trio told the hackers that if the deal was not accepted, “we will move forward.” . “You from all angles with the full extent of the law.”
It appears that the bounty, along with the efforts of white hat hackers, was only partially effective, but still enabled the recovery of 73% of the lost assets.
Decentralized responses to decentralized problems
Perhaps even more so than on centralized platforms, hacks seem to be tolerated as an occupational hazard in the world of decentralized finance, while using bounties to help recover funds is an accepted strategy and white hat hackers sometimes play a critical role .
It can be argued that offering bounties to the hackers themselves could serve as an incentive for attackers, but the alternative view is that such tactics simply implement what is most effective given the operating conditions. And related to this, we can find anonymous on-chain experts formalizing their solutions, as became clear when Alchemix announced that it had worked with an organization called Ogle Security Group, which had helped to secure part of the security provided by the Curve hack to recover lost funds.
Ogle’s self-proclaimed mission is to “track down bad guys and return stolen crypto funds.” This straightforward approach appears to essentially provide an unregulated environment and a valuable and in-demand service.
A recurring problem in the crypto sector is wallet hacks, with some incidents related to large platforms and sometimes enormous sums of money in the form of crypto assets being stolen. Despite the high-profile cases, it remains to be seen how this problem will be addressed. However, with institutional market entry and regulatory compliance a priority, such a situation is unlikely to continue.
Data and images from chain analysis
Binance linked wallet hacked
Earlier this month, it was widely reported that a crypto wallet for USDT (that’s the Tether stablecoin) worth around $27 million in total was hacked, and what was notable besides the big numbers was a connection to the Binance exchange .
The stolen funds were withdrawn from Binance, and according to on-chain data, the hacked wallet was able to be reconnected to a Binance Deployer wallet via a transaction from 2019.
Although this suggests a connection between Binance and the victim of the hack, the exchange has not provided any further information on this apparent connection and there have been no further updates on the Binance security team’s findings, according to a previous comment from a Binance spokesperson “investigated the matter.”
Continue reading
This reflects how crypto has worked so far, with security breaches being part of the landscape, but there may be larger, significant changes coming.
This week, Binance was fined $4.3 billion by the Justice Department, while founder Changpeng Zhao resigned from his position as CEO and pleaded guilty to felony charges. These developments mean that Zhao will be banned from having any operational involvement in Binance for a period of three years and that the exchange will be monitored by an independent compliance monitor.
When it comes to centralized exchanges, regulatory compliance could come to the fore.
The Poloniex hack
Shortly before news of the Binance Connected Wallet hack broke, there was another significant breach on the Poloniex exchange, which was partly due to Tron founder Justin Sun becoming a major investor in 2019.
Last month, Poloniex was hacked to loot around $125.6 million worth of tokens, with the funds flowing primarily through three networks: Ethereum, Tron and Bitcoin. In response, the platform offered the hacker a 5% bounty in exchange for refunding the funds.
As a result, Poloniex announced this week that it had determined the hacker’s identity and posted an on-chain message in fifteen languages to the suspected perpetrator, announcing that a final $10 million bounty had been placed be. This is associated with a deadline of November 25th, after which the law enforcement authorities should be involved.
It’s an exciting turn of events worthy of a Netflix drama, but has been met with some skepticism in the online crypto community that questions the veracity of what happened.
dYdX and Curve offer rewards
The use of bounties to pursue evildoers is not new, as dYdX demonstrated earlier this month. In this case, however, it was not a hacker attack, but rather an accusation of price manipulation, as the price of Yearn Finance’s YFI token was apparently manipulated via the decentralized trading platform dYdX, resulting in losses of around $9 million the dYdX insurance fund.
This has led to dYdX announcing that bounties will be offered to anyone who can significantly contribute to the search for the suspected market manipulator, although the matter has not yet been resolved.
On-chain news is another recurring theme, as happened after Curve Finance was hacked for around $73 million in late July, an attack that also resulted in losses for DeFi platforms Metronome and Alchemix through their liquidity pools on Curve led.
In exchange for returning the stolen crypto assets, the hackers were promised a 10% bounty and an offer not to involve law enforcement, but the DeFi trio told the hackers that if the deal was not accepted, “we will move forward.” . “You from all angles with the full extent of the law.”
It appears that the bounty, along with the efforts of white hat hackers, was only partially effective, but still enabled the recovery of 73% of the lost assets.
Decentralized responses to decentralized problems
Perhaps even more so than on centralized platforms, hacks seem to be tolerated as an occupational hazard in the world of decentralized finance, while using bounties to help recover funds is an accepted strategy and white hat hackers sometimes play a critical role .
It can be argued that offering bounties to hackers could itself serve as an incentive for attackers, but the alternative view is that such tactics simply implement what is most effective given the operating conditions. And related to this, we can find anonymous on-chain experts formalizing their solutions, as became clear when Alchemix announced that it had partnered with an organization called Ogle Security Group, which had helped provide some of the security through the Curve hack to recover lost funds.
Ogle’s self-proclaimed mission is to “track down bad guys and return stolen crypto funds.” This straightforward approach appears to essentially provide an unregulated environment and a valuable and in-demand service.
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