Chilling as Hackers stole $320 million in Cryptocurrencies from Wormhole DeFi Project

Fredrick Awino
20.07.2022
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Cryptocurrencies keep growing both in number and acceptance globally. New countries continue to join the fray of recognising cryptocurrencies  just the same way more retailers now recognise cryptocurrency payments. Amidst this progress which could be a real inspiration for crypto enthusiasts is the question of crypto hacking and scammers. They come in different forms and shape but the fact is that every successful crypto transaction just means a triumph over the high tech hackers. They are always on the lookout for the next victim to prey on.

WARNING: Investing in crypto, or other markets, can be of a high risk for your savings. Do not invest money you cannot afford to lose, because there is a risk for losing all of your money when investing in crypto, stocks, CFDs or other investments options. For example 77% of retail CFD accounts lose money.

So many cases of crypto scamming and hacking have been reported yet others too go unreported. Without necessarily raising too much alarm, even the most secure transactions in crypto is not exempted from being a target of scammers.

Wormhole DeFi Project

A wormhole is a bridge between Solana and the other blockchains. About 120, 000 ether was stolen and this makes it the second largest DeFi hack. A wormhole has over $1 billion in total assets. Also, it supports about six blockchains including Polygon, Binance Smart Chain, Avalanche, Ethereum, Terra, and Solana.

During the hacking, only wETH was affected. The other tokens are still intact. Wormhole works in a way that when a trader transfers assets from one of the blockchains to the other it steps in locking the transaction. In addition, it mints a wrapped version like wrapped ether (wETh) to the final chain.

After the attack, Wormhole said that the vulnerability which resulted in the attack had been patched. The network also added ETH in ensuring that wETH is continually backed on the basis of one-to-one. Even though the company assured its traders that their money is safe, the hack affected the SOL (Solana) price. After the attack, the price was reduced by 14.36%.

Is DeFi’s Security Good?

After the attack, the co-founder of Bloomberg, Tom Robinson said that the security of DeFi services has not reached a place where it can store huge amounts. Thus, it should improve its security. He also said that the fact that the blockchain is transparent makes the attackers exploit and identify the main bugs.

Elliptic figures confirm that this is the fourth largest crypto theft. Unfortunately, in the DeFi space, this is the second largest. Some of the victims have attempted to directly contact the hacker. Here is an example of a message sent to the person, “I lost $100,000 in your attack. I am a nurse. These are all my savings. I hope you can return it to me. Everyone will get sick. Think of the nurses who care for you when you are sick. I wish you are always healthy and enjoy the happiness of the world. GOD BLESS YOU.”

The attacks which have happened in the past including the one for last year January where $80 million of Binance coins were lost is a concern. The highest attack was a $600 million Poly Network crypto heist. It makes the public to be concerned DeFi projects’ security. When you look at the DeFi projects, they seem appealing. However, that should not make a trader just invest in the projects. Instead, you should consider its security and protection.

The DeFi projects are a concern as they remove law enforcement and official regulators’ scrutiny.  This issue makes it to be vulnerable to hacks. As of now, there are several DeFi projects that one may choose from. Therefore, as an investor, you should just invest in the ones that you consider reliable. Currently, about 2.2 billion has been stolen from DeFi projects due to its vulnerabilities.

 Crossh Chain Bridges

The crypto holders do not usually operate in one blockchain ecosystem. Because of this, developers have developed cross-chain bridges. The aim is to enable the users to send cryptos from one of the chains to another.

The Wormhole enables the users to move their NFTs and tokens between Ethereum and Solana. After the attack, the network went offline. During the period, the developers said it was down for maintenance.

Wormhole works by having two smart contracts. One is in every chain and they offer blockchain infrastructure to companies and developers. Therefore, the attacker exploited Solana’s vulnerability in the Wormhole bridge by creating 120, 000 wrapped Ethereum tokens. After that, they used the tokens in claiming Ethereum which was held on the Ethereum bridge side.

 

Author Fredrick Awino