Solana DeFi Exchange Raydium hacked for over $2 million

It’s been a tough holiday season for Solana.

After struggling to recover from the crippling damage done to the network by the stunning downfall of one of its most prominent backers, the disgraced FTX founder Sam Bankman-Fried, Solana now has a significant hack on one of his biggest suffered DeFi logs.

Early Friday, Solana DeFi protocol Raydium announced that a hacker had managed to take over the organization’s “owning authority” and used that access to begin draining Raydium’s liquidity swimming pool. DeFi tools allow users to trade, borrow, and lend crypto assets with each other without third-party intermediaries. And automated market makers like Raydium achieve this by allowing users to contribute assets to a pool, often in exchange for tokenized rewards.

An exploit on Raydium that affected liquidity pools is being investigated. Details will follow as soon as more is known

⁰Initial understanding is that ownership authority has been seized by the attacker, but authority for AMM and farm programs has been stopped for now
Attacker Accounthttps://t.co/ZnEgL1KSwz

— Raydium (@RaydiumProtocol) December 16, 2022

Today, in a matter of hours, a hacker stole over $2.2 million worth of digital assets from one such pool on Raydium, including $1.6 million worth of SOL, according to analysis by blockchain analytics firm Nansen.

The hacker appears to have conducted the attack using one of the protocol owner’s private keys. It remains unclear how the hacker accessed this information.

Raydium is one of Solana’s largest decentralized finance protocols and is considered one of the cornerstones of Solana’s DeFi ecosystem. The fact that it was vulnerable to such a top-down method of exploitation led many in the Raydium community to advise withdrawing from the protocol entirely.

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There seems to be a wallet that drains LP pools from Raydium liquidity pools by using the admin wallet as a signer without having/burning LP tokens.

We have withdrawn the PRISM/USDC liquidity provided in the protocol from Raydium

WITHDRAW YOUR PRISM/USDC LIQUIDITY FROM RAYDIUM

— PRISM (@prism_ag) December 16, 2022

In the minutes after the hack, Raydium’s native token RAY fell a little over 8% to $0.16 on write, according to the report CoinGecko. The total value of the log fell by over 27% to $34.73 million over the same period, according to the report DeFi Flame.

The exploit comes just a month after several wallets were emptied by FTX, which was then in the throes of collapse $650 million in digital assets. Bankman-Fried later claimed that while the attack was not his doing, it may have been the doing of a former FTX employee. Bankman-Fried was arrested on Monday eight criminal charges including conspiracy, wire fraud and money laundering.

In the days following FTX’s collapse, it was revealed that the private keys of Solana’s decentralized exchange and liquidity provider Serum – co-founded by Bankman-Fried himself – were stored on FTX. Given that Serum has been integrated into almost every major Solana DeFi project, including Raydium, the news Spread panic across the network. Raydium and a number of other protocols rushed to sever ties with Serum and then fork the project unaffected by the FTX fallout.

While not necessarily related to Serum or FTX, Friday’s Raydium hack shows that Solana’s woes are far from over.

Just when we think #Solana can’t get any worse, it finds a way to surprise us!

— Helin ULKER (@beautyofhelin) December 16, 2022

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