On April 19, Hedgey Finance, an on-chain token infrastructure provider, fell victim to two separate exploits as attackers exploited a vulnerability in its token claims contract. Security alerts from Cyvers revealed that the attacks occurred on both the Ethereum (ETH) and Arbitrum (ARB) blockchains, resulting in significant losses for the platform.
The initial attack, launched on the Ethereum chain, saw hackers abscond with approximately $1.9 million worth of cryptocurrency. On-chain analytics traced the attacker’s address back to web3 crypto exchange ChangeNOW, with stolen funds subsequently exchanged for Maker’s stablecoin DAI.
In response to the breach, Hedgey Finance issued a statement confirming the incident and initiated an investigation into the matter. Users were advised to revoke token claim permissions as a precautionary measure.
The protocol provided by Hedgey Finance enables the creation of options markets for digital assets, facilitating peer-to-peer ERC20 options trading without the need for listing requirements. However, the exploit exposed vulnerabilities in its security infrastructure, leading to substantial financial losses.
Shortly after the initial attack, Cyvers issued a follow-up alert indicating a second breach on the Arbitrum network, resulting in a staggering $42.8 million loss. The attackers exploited the same vulnerability across both Ethereum and Arbitrum, transferring some of the proceeds to the Bybit exchange.
The incident underscores the ongoing security challenges faced by decentralized finance (DeFi) platforms, highlighting the need for enhanced security measures and expertise to safeguard against such exploits. As the cryptocurrency market gains mainstream attention, on-chain security remains a critical concern for industry participants.
While hacks continue to pose a threat to the DeFi ecosystem, there are signs of improvement, with recent data indicating a decline in crypto exploits and smaller investor losses. White hat experts are also actively engaged in mitigating risks by providing real-time reporting and information dissemination on exploit strategies.
As DeFi platforms strive to enhance their security measures, the industry remains vigilant in addressing emerging threats and protecting user funds from malicious actors.
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