On 12 August, the Poly Network DeFi platform announced that, following the theft of $610 Million in digital coins, the hacker thieves had returned $342 million. However, it’s been reported that more recently, almost all of the stolen crypto has now been returned.
The Hack
The original theft, which had taken place just two days before (10 Aug), saw hackers stealing an incredible $610 million in different cryptocurrencies from the Poly Network, a decentralised finance platform (DeFi) that facilitates peer-to-peer transactions.
Returned
After calls to return the stolen currencies, amazingly, the thieves decided to return just over half the next day (11 Aug). The returned currencies were $3.3M of Ethereum, $256M of BSC, and $1M of Ploygon. Poly Network Tweeted that this has left $269M on Ethereum, and $84M of Polygon still outstanding.
How?
According to blockchain forensics company Chainalysis, the hackers were able to exploit a vulnerability in the digital contracts Poly Network uses to move assets between different blockchains.
For Fun & To Expose Security Issues
It has been reported that the (unknown) hackers have sent messages to say that the hack and theft were carried out for “fun” and to “expose the vulnerability”, and that it was always the plan to return the stolen currencies. There is also speculation that the hackers have (so far) returned most of what they stole because of the complications of trying to launder stolen cryptocurrencies on that scale because of the transparency of the blockchain, and the broad use of blockchain analytics by financial institutions.
DeFi Platforms
DeFi platforms, including the Poly Network, handled more than $80 billion worth of digital coins last year and are valued by people and businesses because they offer free access to financial services without having to go through the usual gatekeepers such as banks or exchanges and, therefore, help to cut costs as well as boosting economic activity.
Vulnerabilities and Previous Hacks
As highlighted by hackers in this recent $610 million hack, DeFi platforms tend to have technical flaws and weaknesses in their computer code that can make them vulnerable to attack.
For example, $530 million in digital coins was stolen from Tokyo-based exchange Coincheck in 2018. Also, the Tokyo-based Mt. Gox exchange, collapsed in 2014 after losing half a billion dollars in bitcoin.
What Does This Mean For Your Business?
There have been more positive signals about cryptocurrencies in recent years since the last bitcoin crash (e.g. Tesla allowing customers to pay in Bitcoin – before changing their minds over its environmental impact), and PayPal (previously owned by Elon Musk) saying last October that it was ready to allow its users to buy, sell, and hold Bitcoin BTC and other cryptocurrencies. This recent hack, however, highlights an area that has held back cryptocurrencies and their trading; i.e. technical vulnerabilities / security risks. The volatility and lack of stability of cryptocurrencies, and the negative environmental impact such as the vast amounts of (mainly fossil fuel) power needed for crypto-mining have also acted as deterrents to many potential users and investors. One key technology behind them, blockchain, has, however, proven to be very useful in many different other applications across many industries. Despite the problems that crypto-currencies are having now, their development and wider and continued use going forward seems likely, and more businesses will use them as the big security, instability, and environmental issues are ironed out over time.