DeFi Platform Poly Network Hackers Robbed For $600 Million

Aug 17, 2021
3 min read

What's the Buzz All About?

Hackers stole roughly $600 million in bitcoin via a technology known as PolyNetwork, which allows users to trade tokens across various blockchains.

In recent years, hackers stole cryptocurrency worth more than $600 million from Poly Network, a decentralized finance network in one of the greatest crypto heists. Surprisingly, the person who stole the money returned almost a third of the stolen assets to the government.

Several tweets from Poly Network, a company that uses digital assets for lending and other financial activities, revealed the theft on Tuesday morning. It was estimated that the stolen coins were valued at over $610 million at the time by blockchain security startup SlowMist. These included ether and tokens backed by bitcoin, tether, a coin meant to replicate the value of the U.S. dollar, and Shiba Inu, a novelty cryptocurrency based on the dogecoin funny cryptocurrency and named after a Shiba Inu dog breed.

As of Wednesday, 11th August 2021, Poly Network reported that assets worth $260 million had been returned to the company. Purported hackers stated that they always intended to repay the cash in a series of long question-and-answer posts on their blockchain account used to steal the funds.

The attack has harmed tens of thousands of users, PolyNetwork claimed in a letter published on Twitter. The attacker cannot access it because Tether's issuer has frozen about $33 million of the Tether stable coin that was part of the heist.

In an email, Tom Robinson, co-founder of Elliptic, said that "the hacker has begun to use decentralized exchanges to transfer the stolen funds into other assets, including stable coins." In principle, stable coins may be taken by their issuers and restored to their owners. As for the stolen Ether, this isn't possible. However, if the money is moved to an exchange to be cashed out, it may be conceivable for authorities to take them.

Attack on DeFi

In recent years, DeFi has been a popular target for hackers. According to cryptocurrency compliance provider CipherTrace, hacks connected to DeFi totalled $361 million from January to July. Fraud with DeFi is also on the rise. Fraud with DeFi is also on the rise. 54% of the entire crypto fraud volume was attributed to it in the year's first seven months.

The fact that DeFi applications have attracted billions of dollars in investment capital means that they've become frequent targets of assaults. A crypto security company reports that hacks connected to DeFi accounted for more than 60% of the overall volume of crypto assaults this year, up from 20% in 2020. To date, the $156 million derived from DeFi-related breaches in the first five months of 2021 has overtaken all of 2020s $129 million derived from DeFi-related attacks.

Bitcoin, Ethereum, and other crypto-currencies are built on a distributed ledger called a blockchain. As a result, each digital coin has its own blockchain, which makes them all unique. According to Poly Network, these different blockchains may be made to interact.

The Poly Network is a decentralized finance network that uses blockchain technology to operate. It refers to a wide range of financial applications based on blockchain technology that aims to eliminate intermediaries, such as brokerage firms and exchanges. This is why it's called decentralization.

Hackers Returning the Funds

Strangely enough, hackers began returning some of the funds they took on Wednesday. "We are ready to repay" the cash, they said in a message hidden in a bitcoin transaction that was delivered to Poly Network. For the money to be transmitted to three crypto addresses, DeFi's network demanded it is paid to three crypto addresses.

More than $4.8 million had been refunded to Poly Network addresses as of 7 a.m. London time. Approximately $258 million had been sent back by 11th August 2021.

In an email, Elliptic’s chief scientist, Tom Robinson, said: "I think this shows that even if you can steal crypto-assets, laundering them and paying them out is incredibly difficult because of the blockchain's transparency and the use of blockchain analytics."

It was determined in this situation that returning the stolen assets would be the safest choice. Following their theft of funds, hackers began transferring the funds via bitcoin addresses. Over $610 million in bitcoin was moved to three different addresses, according to SlowMist's researchers.

After "grabbing the attacker's mailbox, IP address, and device fingerprints," SlowMist stated in a tweet that its experts were "following probable identification evidence connected to the Poly Network attacker." A long-planned and well-executed heist, according to the experts, is likely to have occurred. "Blacklist tokens" coming from the addresses related to the hackers, Poly Network advised cryptocurrency exchanges in a blog post.