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Defrost Finance

Defrost Finance Hacker Changes His Mind And Returns $12 Million Stolen Funds

Christian Encila
by Christian Encila
2 years ago
·
Posted in Crypto News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

Defrost Finance, a DeFi protocol built on the Avalanche blockchain that offers leveraged trading, recently released a blog post that contained some “good news” for users that were affected by the Christmas Day hack that drained the project of around $12 million worth of crypto assets.

According to the latest update shared by the team managing the decentralized finance venture, the still-to-be-identified cybercriminal responsible for the hack seemed to have had a change of heart and returned all the funds he siphoned off during the breach.

Related Reading: Palau Stablecoin: Island Nation Goes Digital With Help From Ripple Labs

As a means of confirmation for the bizarre turn of events, Defrost Finance showed to the public the wallet address that now contains the returned assets which include $3 million worth of ETH tokens and 9.9 million DAI.

The project remains mum as to the details of the recovery or return of the funds and have not released any form of communication with regards to the particular matter, failing to address some speculations that it might have paid a bounty to the cyber attacker.

Image: The Crypto Times

How The Defrost Finance Attack Happened?

Last Sunday, using their Twitter account, the Defrost Finance team said its V2 product was targeted and drained of funds via a flash loan attack.

Shortly after, a larger and more malicious cyber exploit followed, this time targeting the DeFi protocol’s V1 product with the use of an owner key.

The project did not say how much exactly was stolen from its coffers, but other data later revealed that its total value locked (TVL), which stood at $13 million in recent weeks, plummeted to $93,000 on the same day the attacks happened.

We received community intel warning the rugpull of @Defrost_Finance. Our analysis shows a fake collateral token is added and a malicious price oracle is used to liquidate current users. The loss is estimated to be >$12M. https://t.co/70iu38OYh7 pic.twitter.com/rSKklgV71I

— PeckShield Inc. (@peckshield) December 24, 2022

PeckShield and Certik, both well established blockchain security firms, weighed in on the development, saying the incident might have been a case of a rug pull – also known as “exit scam” where developers create a liquidity pool but remove the funds and disappear after investors have bought a certain related asset.

This case, however, is a bit peculiar if it is indeed a rug pull considering Defrost Finance was able to contact the perpetrator and even offered a 20% share of the funds.

The Defrost team is willing to negotiate with the hacker(s).

We are willing to discuss sharing 20% (negotiable) of the funds in exchange for the bulk of assets and are calling on the hackers to contact us asap.

— Defrost Finance 🔺 (@Defrost_Finance) December 25, 2022

Related Reading: Kabosu, The Real-Life Pooch Behind Dogecoin, In ‘Dangerous’ Health Condition

What Happens Next?

Following the incident, Defrost Finance buckled down to “repair” the damage in order to compensate its affected users.

Defrost said:

“We will soon start scanning the data on-chain to find out who owned what prior to the hack in order to return them to the rightful owners.”

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Christian Encila

Christian Encila

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Christian, a journalist and editor with leadership roles in Philippine and Canadian media, is fueled by his love for writing and cryptocurrency. Off-screen, he's a cook and cinephile who's constantly intrigued by the size of the universe.

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