Topline
Wormhole Portal, a platform that helps users transfer cryptocurrency between the Solana and Ethereum blockchains, said Thursday morning that more than $325 million worth of tokens allegedly stolen less than a day earlier were safe, but that didn’t stop the prices of ether and sol from plummeting after the hack—one of the biggest ever in the booming and largely unregulated decentralized finance space.
Blockchain platform Wormhole has offered the attacker $10 million to return the funds.
Key Facts
Blockchain platform Wormhole, which launched last August and holds roughly $1 billion in deposited funds, confirmed on Twitter early Thursday that funds involved in the hack had been “restored,” a few hours after the firm said “all funds are safe” on its Telegram channel.
Despite the funds’ retrieval, ether and sol prices were still plunging Thursday morning, down 6% and 11.5%, compared to a 5% drawback for the broader cryptocurrency market.
Wormhole previously notified users of a possible hack on Twitter at about 4 p.m. ET Wednesday, saying its network was down for maintenance as the firm looked into a potential attack.
About an hour later, Wormhole, which did not immediately respond to Forbes’ request for comment, said its network had been exploited and claimed about 120,000 tokens of a cryptocurrency known as wrapped ether, which tracks the value of the world’s second-largest cryptocurrency, ether, had been stolen—representing some $325 million in value.
In a message embedded onto the Ethereum blockchain, Wormhole offered the attacker a $10 million bounty to return the funds, according to blockchain analytics company Elliptic, which called the Wednesday incident the fourth largest cryptocurrency hack ever.
Soon after the attack, analysts at blockchain security firm CertiK said the hack represented the largest-ever attack on the Solana network and an “unfortunate reality” for the booming decentralized finance space, which has heated up among investors alongside the broader cryptocurrency industry over the past year, despite a growing number of similar hacks.
Tangent
Even though the space only started gaining traction in 2020, there have been more than $2 billion in direct losses suffered by decentralized finance services due to hacks and exploits, according to Elliptic on Wednesday. In August, hackers breached blockchain-based platform Poly Network and extracted more than $600 million in cryptocurrencies, marking DeFi’s biggest hack ever. Those funds were eventually returned.
What We Don’t Know
It’s still unclear who the alleged hacker is and whether Wormhole paid the bounty for the safe retrieval of stolen funds.
Big Number
$192 billion. That’s the market value of all decentralized finance tokens, according to cryptodata website DeFi Llama. The space shot past a $250 billion valuation for the first time ever in December but has since fallen amid a broader cryptocurrency market sell-off.
Key Background
Securities and Exchange Commission Chairman Gary Gensler has repeatedly said the decentralized finance industry, also known as DeFi, deserves more government scrutiny. Such platforms largely sidestep traditional intermediaries like central banks and exchanges for financial services and instead rely on blockchains and cryptocurrencies to process transactions. Gensler has said the practices can implicate securities, commodities and banking laws, and last year called on Congress to ramp up its authority over the cryptocurrency industry, which he likened to the “Wild West.”
Further Reading
Hacker Returns Nearly All $600 Million Stolen In Ethereum, Other Tokens After Major Crypto Heist (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/02/03/325-million-in-stolen-crypto-safe-after-one-of-solanas-biggest-hacks-ever-ethereum-and-sol-prices-still-plunging/