Crypto Heist

By Pranay Singh Bayas, Content and Research Analyst at Moving

The cryptocurrency sector has sparked a lot of interest. However, many newcomers are unaware of the risks.

The world witnessed the largest Cryptocurrency hack earlier in August. The attack cost Poly Network around $600 million. This happened on Ethereum, Binance Smart Chain, and Polygon, among other blockchains. $273 million in Ethereum tokens, $253 million in Binance Smart Chain tokens, and $85 million in USDC on the Polygon network were the stolen funds.

What is Poly Network?

Poly Network was founded with the objective of establishing interoperability across several chains in order to build the next-generation internet infrastructure. Poly Network runs a set of smart contracts that enable for cross-chain transactions. Poly Network has merged with Bitcoin, Ethereum, Neo, Ontology, Binance Smart Chain, and many more organizations.

The Hack

The hackers could move the funds to their crypto wallets by exploiting Poly Network’s code vulnerability. A cryptographic flaw was the root of the hack. The hack has had far-reaching consequences. As a result, O3, a trading pool that leverages Poly Network to exchange tokens across several blockchains, had forced to halt cross-chain trading. Tether, a stable coin, has frozen $33 million, rendering it unavailable to the hackers. Binance Chain, Ethereum, and Polygon assets were transferred directly into the hackers’ pockets.

The Help

In an unexpected twist, the Poly Network hacker did not flee with the loot. Instead, they offered to refund all the funds. More than $200 million in assets were locked up in an account that needed Poly Network and the hacker to enter passwords. The hacker first declined to provide the password, merely stating that they would do it when “everyone is ready.” Poly Network appealed to the hacker to restore the money that was still missing. The company also promised the hacker a $500,000 reward for assisting them in identifying a security weakness in its systems, as well as a post as “chief security advisor.”

Moreover, many other people and firms in the crypto space extended a helping hand.

Previous Crypto Hacks

  • Coincheck: $534 Million — In 2018, the Japanese exchange was robbed of $534 million. Customers were eventually reimbursed. Lon Wong, president of the NEM Foundation, called it “the biggest theft in the history of the world.”
  • BitGrail: $195 Million — BitGrail, an Italian cryptocurrency exchange, was hacked, with staff members claiming that $195 million in the token Nano was taken. 230,000 BitGrail customers are estimated to have lost money.
  • MtGox: $450 Million — Mt. Gox used to handle more than 70% of all bitcoin transactions. They were hacked and declared bankrupt in 2014. None of the victims have yet been reimbursed.

DeFi Hacks

Decentralized finance, or DeFi, is a method for making financial goods available on a decentralized blockchain network that is open to the public. As a result, instead of going via intermediaries like banks or brokerages, anybody may utilize them. To achieve decentralization, various technologies and protocols are employed, and this has been made possible by smart contracts.

Many DeFi projects may be vulnerable to hacking due to developer ignorance, which leads to code errors that hackers may exploit. Other cybercriminals can take out a flash loan and alter the token price in order to compromise the DeFi system. So far in 2021, hacks in the decentralized finance (DeFi) system have accounted for approximately 76% of all significant hacks globally.

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