A dead protocol extracts crypto funds from a hacked pool.
Hackers have managed to exploit the decentralized finance (DeFi) lending protocol's production protocol smart contracts to launder their funds.
The production protocol was closed in December 2023, citing a lack of commercial interest and an inability to keep up with global regulatory pressures. Following the windfall, the product protocol has repeatedly advised investors to close their positions, withdraw their funds and pay off pending loans.
Despite the warnings, an unknown hacker stole $181,000 worth of crypto assets from strategic contracts on the Arbitrum blockchain. The hack was first announced by blockchain investigative firm PeckShield and later confirmed by Certike.
Based on the follow-up investigation, Certike found the following:
“The attacker used the difference between the pool token balance and the total supply of flash-borrowed assets to issue additional pool tokens.”
Official support for the production protocol ended on February 2nd, and despite the recovery story, attempts to recover the stolen funds seem unlikely.
In the year In March 2023, the production protocol, along with 10 other decentralized finance protocols, suffered bankruptcy after another credit protocol, Euler Financial, attacked. By July 2023, the production protocol had fully recovered from the Euler flash loan attack.
At the time, SellProtocol worked with Euler to refund the money, deploy 26 new contracts and execute nearly 300 authorized calls to reset the fixed-product token maturity and restore the protocol.
Related: Lazarus Group Raises Over $200M in Hacked Crypto Since 2020
Blockchain security firm Immunefi recently reported a 23 percent drop in the first quarter of 2024 compared to 2023 due to hacking and fraud.
According to the report, nearly $336.3 million was lost to hacking and fraud in Q1 2024, which was the highest in 2024. That's down from $437.5 million in the same quarter in 2023.
The report revealed 46 cases of hacking and 15 cases of fraud. Chain Bridge Protocol's Orbit Bridge lost the most at $81.7 million.
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