News - Cypher Protocol: $600K in stolen money now frozen on exchanges

By Mike Hesp

Cypher Protocol: $600K in stolen money now frozen on exchanges

Scams, crime and fraud
Exchanges

The Cypher Protocol has revealed that $600,000 in stolen funds are currently frozen on centralized exchanges (CEXs). This protocol, based on the Solana network, has managed to prevent the stolen funds, which were the result of a security breach on Aug. 7, from being siphoned off.

In a tweet on Aug. 18, Cypher Protocol reported that more than half of the stolen funds have been successfully frozen on various centralized exchanges, thanks to the efforts of multiple independent blockchain researchers.

The Cypher Protocol was abused on Aug. 7 to the tune of about $1 million, leading to a temporary halt of the protocol's smart contracts.

This decentralized futures exchange protocol on Solana allows users to originate and lend through primary accounts with multiple linked sub-accounts. Unfortunately, security vulnerabilities prevented isolated sub-accounts from being properly tracked and did not provide sufficient margin checks before loans were made. This was explained by the blockchain security firm Halborn. The attacker exploited these code vulnerabilities by using multiple accounts to siphon off an estimated $1 million in various cryptocurrencies, including USDT, SOL and wETH.

The team knew make contact with the hacker after offering a 10% "white hat" reward, worth about $120,000.

Two days later, Protocol announced that the hacker had missed the deadline to return the funds, after which they opened the reward to the public. They also hinted that they were partially aware of the perpetrator's identity.

On August 16 presented Cypher a plan for the recovery process and a "loss sharing policy" to fairly distribute the remaining assets among affected users. Protocol assets will be distributed pro rata based on each user's share, it said.

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