Ankr exploit: While its staking derivatives recover, BNB continues to decline

• The price of BNB has been on a continuous decline since the Ankr exploit.
• Ankr confirmed that a former employee was responsible for the $5 million exploit.

Despite Binance Coin’s [BNB] staking derivatives post-recovery, following Ankr’s exploit at the beginning of the month, BNB continued on a decline, data from CoinMarketCap revealed. 

Read Binance Coin’s [BNB] Price Prediction 2023-24

On 2 December, during early trading hours, DeFi protocol Ankr suffered an exploit that led to an excessive minting of the aBNBc token on its staking platform. Consequently, the token suffered a loss of $5 million.

This led to a sharp fall in the price of aBNBc and other BNB staking derivatives, including BNBx and stkBNB. Despite the sharp drop in the prices of BNBx and stkBNB tokens on 2 December, these liquid staking derivatives rebounded to their respective positions prior to the exploit. BNB, on the other hand, fell by 24%. 

In addition to the Ankr exploit, the persistent drop in BNB’s value was attributed to the series of problems that have trailed cryptocurrency exchange Binance and its founder, Changpeng Zhao, in the past few weeks.

Following FTX’s collapse, there have been growing concerns about the state of Binance’s finances and whether the exchange would be next in line to collapse. The FUD was exacerbated by reports of imminent criminal action against Binance and its executives, including founder Changpeng Zhao.

Further, on 16 December, Mazars Group, one of the big accounting firms that conducted Proof-of-Reserves (PoR) audits for Binance and other exchanges, announced an audit suspension for its crypto clients. 

On a year-to-date basis, BNB’s price was down by 51%.

What caused the Ankr exploit?

In a statement published by the decentralized finance (DeFi) protocol Ankr, a former employee was responsible for the $5 million exploit earlier in December 2022.

In the blog post, Ankr stated:

“A former team member (who is no longer with Ankr) acted maliciously to conduct a combination of a social engineering and supply chain attack, inserting a malicious code package that was able to compromise our private key once a legitimate update was made.”

A 6.05x hike on the cards if BNB hits Bitcoin’s market cap?

Following the attack, Arkham Intelligence, a crypto intelligence firm, stated that the “possibility of an inside job should not be ruled out.”

After moving through CEX, the Helios Exploiter’s address is likely known only to Binance.

However, chain-sleuth @Jiran_z identified a link between the original attacker and the contract deployer of Ankr itself.

The possibility of an inside job should not be ruled out. https://t.co/r1P8DSbHWN

— Arkham | Crypto Intelligence (@ArkhamIntel) December 2, 2022

Ankr confirmed that it informed law enforcement to potentially prosecute the concerned former employee:

“We are in the process of working with law enforcement to prosecute the former team member and bring them to justice. Unfortunately, internal bad actors can affect any protocol, and we are working on shoring up internal HR processes and safety measures to strengthen our security posture going forward.”