DeFi scams go from zero to $129 million in a year to become top financial hack

guest · Aug 26, 2021

DeFi scams go from zero to $129 million in a year to become top financial hack
August 24, 2021
https://www.techrepublic.com/articl...llion-in-a-year-to-become-top-financial-hack/

Criminals are modernizing classic investment scam tactics and bringing them to the world of DeFi where there are no rules or regulations to protect investors. Atlas VPN analyzed financial hacks over the last two-and-a-half years and found that DeFi hacks represent 76% of all major hacks for the first half of 2021. In 2020, that type of hack represented only 25% of the total.

The problem has jumped from basically zero dollars lost to DeFi hacks in 2019 to $129 million in 2020 and $361 million in the first half of this year. In 2020, DeFi hacks took in $129 million of the $516 million lost to hacks that year.
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DeFi is shorthand for decentralized finance, a system that makes financial products available on a public decentralized blockchain network. Individuals can get a loan through these services without having to go through a bank. DeFi uses open source technology, blockchain, proprietary software and smart contracts to facilitate these transactions.

The Atlas VPN analyst who reviewed the data said in a blog post that "many DeFi projects get hacked because of developer incompetence which causes coding mistakes that hackers can abuse."
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The Atlas VPN analysis suggests that there are two types of DeFi scams: Outside agents hacking the DeFi protocol and rug pull scams.

These scams are a perfect fit for decentralized currency exchanges because users can list tokens for free and without audit, according to CoinMarketCap.
Cyber criminals also take out flash loans to manipulate the token price. These loans are another security risk that is navtive to DeFi systems, as Haseeb Qureshi explained in an article on Coindesk: [...]
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atlasVPN: DeFi related hacks account for 76% of all major hacks in 2021

The data is based on the Cryptocurrency Crime and Anti-Money Laundering Report released by CipherTrace in August 2021.

This year, the biggest DeFi hack happened in May when the PancakeBunny protocol faced a flash loan exploit that extracted $45 million worth of crypto assets.
In June 2021, DeFi project WhaleFarm rug pulled $2.3 million from investors.

The crypto industry has generated a lot of excitement, however, many newcomers are unaware of the risks.
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guest · Oct 28, 2021

Crooks steal $130 million worth of cryptocurrency assets from Cream Finance
October 28, 2021
https://securityaffairs.co/wordpress/123861/cyber-crime/cream-finance-cyber-heist-130m.html

C.R.E.A.M. Finance is a decentralized lending protocol for individuals, institutions and protocols to access financial services. It promises earnings to users who are passively holding ETH or wBTC. Threat actors have stolen $130 million worth of cryptocurrency assets from the decentralized finance (DeFi) platform. The attack was also confirmed by the company.

According to the experts, the attackers have likely exploited a vulnerability in the platform’s flash loan feature, then transferred the stolen funds to a wallet under their control before splitting them through other wallets. Cream Finance has quickly addressed the flaw.
Unfortunately, this is the third time Cream Finance has been hacked this year, in August threat actors have stole $29 million and another $37 million were stolen in February.
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DeFi attacks are becoming very profitable for threat actors, according to a recent post published by CipherTrace they totalled 361 million By July 2021 and accounted for 76% of all major hacks in 2021.

“By July 2021, DeFi-related hacks total $361 million, already making up three-quarters of the total hack volume this year—a 2.7x increase from 2020. DeFi-related fraud continues to rise, as well. At the time of this report, DeFi-related fraud accounted for 54% of major crypto fraud volume, whereas last year DeFi-related fraud only made up 3% of the year’s total.” states CipherTrace.
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guest · Nov 5, 2021

bZx Network Hacked for $55M
bZx joins the long list of DeFi project that have been hacked for millions in 2021.
November 5, 2021
https://cryptobriefing.com/bzx-network-hacked-for-55m/

Key Takeaways

DeFi protocol bZx has been hacked for upwards of $55 million.

The team has not released details concerning how the attack was executed.

A post-mortem is expected in the coming days.

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bZx, a widely-used DeFi protocol, has lost $55 million to an unknown hacker who it claims gained illegitimate access to its private key. It is still not clear how the hackers carried out the attack.
Hacker Drains Funds After Compromising Private Key
bZx, a multi-chain decentralized finance (DeFi) project, has reported that a private key securing its smart contracts on Polygon and Binance Smart Chain (BSC) was compromised.

“It appears private key controlling the Polygon and BSC deployments was compromised, leading to loss of funds,” the team confirmed in a Twitter post.
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The team is yet to explain how hackers stole the private key controlling its Polygon and BSC contracts. It is expected to present a post-mortem report in the coming days.
It is noteworthy that bZx was attacked last year as well. Later, the team claimed to have recovered the funds at the time.

Today’s bZx attack adds to the long list of on-chain hacks that have previously taken place on Polygon and BSC.
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guest · Dec 6, 2021

Really stupid “smart contract” bug let hackers steal $31 million in digital coin
Company says it has contacted the hacker in an attempt to recover the funds. Good luck.
December 2, 2021

Blockchain startup MonoX Finance said on Wednesday that a hacker stole $31 million by exploiting a bug in software the service uses to draft smart contracts.

The company uses a decentralized finance protocol known as MonoX that lets users trade digital currency tokens without some of the requirements of traditional exchanges. “Project owners can list their tokens without the burden of capital requirements and focus on using funds for building the project instead of providing liquidity,” MonoX company representatives say here. “It works by grouping deposited tokens into a virtual pair with vCASH, to offer a single token pool design.”
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An accounting error built into the company’s software let an attacker inflate the price of the MONO token and to then use it to cash out all the other deposited tokens, MonoX Finance revealed in a post. The haul amounted to $31 million worth of tokens on the Ethereum or Polygon blockchains, both of which are supported by the MonoX protocol.
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Only the latest DeFi hack
MonoX isn’t the only decentralized finance protocol to fall victim to a multimillion-dollar hack. In October, Indexed Finance said it lost about $16 million in a hack that exploited the way it rebalances index pools. Earlier this month, blockchain-analysis company Elliptic said so-called DeFi protocols have lost $12 billion to date due to theft and fraud. Losses in the first roughly 10 months of this year reached $10.5 billion, up from $1.5 billion in 2020.

“The relative immaturity of the underlying technology has allowed hackers to steal users’ funds, while the deep pools of liquidity have allowed criminals to launder proceeds of crime such as ransomware and fraud,” the Elliptic report stated. “This is part of a broader trend in the exploitation of decentralised technologies for illicit purposes, which Elliptic refers to as DeCrime.”
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guest · Dec 6, 2021

Someone stole $120 million in crypto by hacking a DeFi website
Dozens of wallets were drained before BadgerDAO could freeze its vaults
December 2, 2021

On Wednesday night, someone drained funds from multiple cryptocurrency wallets connected to the decentralized finance platform BadgerDAO. According to the blockchain security and data analytics Peckshield, which is working with Badger to investigate the heist, the various tokens stolen in the attack are worth about $120 million.

While the investigation is still ongoing, members of the Badger team have told users that they believe the issue came from someone inserting a malicious script in the UI of their website. For any users who interacted with the site when the script was active, it would intercept Web3 transactions and insert a request to transfer the victim’s tokens to the attacker’s chosen address.
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Thursday night, the company said it has “retained data forensics experts Chainalysis to explore the full scale of the incident & authorities in both the US & Canada have been informed & Badger is cooperating fully with external investigations as well as proceeding with its own.”
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guest · Sep 3, 2022

FBI: Hackers increasingly exploit DeFi bugs to steal cryptocurrency
By Sergiu Gatlan @serghei - August 29, 2022

The U.S. Federal Bureau of Investigation (FBI) is warning investors that cybercriminals are increasingly exploiting security vulnerabilities in Decentralized Finance (DeFi) platforms to steal cryptocurrency.

"The FBI has observed cyber criminals exploiting vulnerabilities in the smart contracts governing DeFi platforms to steal investors' cryptocurrency," the federal law enforcement agency said.
"The FBI encourages investors who suspect cyber criminals have stolen their DeFi investments to contact the FBI via the Internet Crime Complaint Center or their local FBI field office."
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The public service announcement, published on the FBI's Internet Crime Complaint Center (IC3) today, adds that out of roughly $1.3 billion in cryptocurrency stolen between January and March 2022, snatched almost 97 percent of it from DeFi platforms.

Per FBI's calculations, this amounts to a significant increase from 72 percent in 2021 and approximately 30 percent in 2020, respectively.
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Attackers have used various methods to hack and steal cryptocurrency from DeFi platforms, including initiating flash loans that trigger exploits in the platforms' smart contracts and exploiting signature verification flaws in their token bridge to withdraw all investments.

The agency has also observed cybercriminals manipulating crypto price pairs by exploiting chains of vulnerabilities, including the DeFi platforms' use of a single price oracle and then conducting leveraged trades to bypass slippage checks.
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DeFi platforms under heavy targeting
FBI's warning follows a Chainalysis report from April that highlighted how, according to Q1 2022 data, DeFi cryptocurrency platforms are now more targeted than ever.

In most incidents, the attackers rely on exploiting security vulnerabilities in their code or a security breach on the platform, allowing them to siphon cryptocurrency to addresses under their control.
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