KyberSwap Attacker Exploited ‘Unlimited Cash Trouble’, Australian Taxation Agency Won’t Clarify DeFi Rules: Finance Redefined
Welcome to Finance Redefined, your weekly volume of decentralized finance (DeFi) insights – a newsletter designed to bring you the most relevant developments from the past week.
The attacker who stole $46 million from the KyberSwap protocol used a sophisticated strategy described by a DeFi expert as an “infinite financial crisis.” With the exploit, the attackers tricked the platform's smart contract into believing it was more liquid than it was.
Cointelegraph tried to get an answer, but the Australian tax regulator was unable to clarify its rules on DeFi. The regulator could not answer whether capital gains tax is applicable on liquid reserves and transfer of assets to layer-2 bridges.
The DeFi ecosystem continued to thrive last week thanks to bullish market momentum, with most tokens trading in the green on weekly charts.
KyberSwap Attacker Used “Unlimited Money Crisis” To Invest Funds – DeFi Expert
DeFi expert Doug Colquitt threads a smart contract exploit on X (formerly Twitter) orchestrated by the KyberSwap attacker that took $46 million from the protocol.
Colquitt described the exploit as an “indefinite liquidity problem,” where hackers tricked the smart contract into believing KyberSwap had more liquidity than it actually did. Colquitt highlighted that it was the “most complex” smart contract he had ever seen.
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Australia's tax agency won't explain its confusing, “burdensome” crypto rules.
On November 9, the Australian Taxation Office (ATO) released new guidance on DeFi. However, the regulator failed to clarify whether capital gains tax is applicable to various DeFi features, such as liquidity and sending funds to a Layer-2 bridge.
Cointelegraph reached out to the ATO to explain the new rules. However, an ATO spokesperson said the tax consequences of the transaction “will depend on the actions taken on the platform or contract and the relevant surrounding facts and the circumstances of the taxpayer who owns the cryptocurrency assets”.
By not providing answers, investors cannot respect the potential consequences of unclear guidance.
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DYdX's founder blamed v3 central units for a “targeted attack”, including the FBI
Antonio Giuliano, founder of the DeFi protocol dYdX, took to X to share the findings of his investigation into the $9 million in insurance funds in the platform. Giuliano said that the DIDX ban was not violated and the insurance claims occurred on the v3 chain. The funds were used to fill gaps in Yearn.finance's liquidation processes.
DIDX's founder explained that the protocol rewards those who are most helpful in the investigation rather than negotiating with exploiters. “We will not pay or negotiate with the attacker,” Giuliano wrote.
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Overview of the DeFi market
According to data from Cointelegraph Markets Pro and TradingView, DeFi's top 100 tokens by market capitalization had a very busy week, with most tokens trading in the green on the weekly charts. The total value locked up in DeFi protocols remains over $47 billion.
Thanks for reading this week's roundup of the most impactful DeFi developments. Join us next Friday for more stories, insights and lessons about this dynamic and evolving space.
