Cypher Protocol, a decentralized finance (DeFi) protocol built on the Solana Blockchain, fell victim to a substantial security breach resulting in an estimated loss of $1 million.
Cypher Protocol is a decentralized futures exchange that allows retail and institutional investors to create and trade pre-public markets.
Unauthorized Transfer Of Funds Leads To Contract Freeze
On August 7th, Cypher Protocol reported a security breach to its 13,500 followers on X (formerly known as Twitter). The breach resulted in the unauthorized transfer of approximately 38,530 Solana (SOL) tokens and $123,184 USD Coin (USDC), culminating in a staggering $1,035,203 loss.
Known for its loyalty and rewards program to depositors and users, this incident has caused some serious damage to Cypher Protocol as actions are taken to salvage the situation.
The breach prompted Cypher Protocol to promptly freeze its smart contract, taking proactive measures against further unauthorized access and initiating an investigation to determine the exploit’s root cause.
The team also made contact with the suspected hacker, initiating discussions for a potential return of the misappropriated funds via their official X handle. “To the hacker: We are writing to see whether you would be open to speaking with us about any potential next steps,” Cypher posted on August 7.
SOL price at $23 | Source: SOLUSDT on Tradingview.com
Cash Out Attempt Exposes Attacker
Following the breach, the alleged attacker attempted to liquidate the stolen assets by transferring 30,000 USDC to Binance’s Solana USDC address, This move underscored the urgency with which the perpetrator sought to benefit from the illicit gains.
Responding to the digital age’s unique fashion, members of the cryptocurrency community sent NFTs with messages to the suspected wallet. These messages ranged from appeals to the attacker’s conscience to more direct calls for accountability.
The community’s consensus is that the utilization of well-known exchanges like Binance and KuCoin will inevitably expose the perpetrator’s identity as the hacker seem to use both to cash out. One of the NFTs, in a messy tone, asked the “hacker” to return the funds.
Interestingly, the security breach coincided with Cypher Protocol’s joint “hacker house” event with Marginfi, a fellow Solana protocol. Marginfi, via its Telegram handle quickly confirmed its independence from Cypher and reassured stakeholders that the breach had no impact on its operations.
The breach’s implications extend beyond Cypher Protocol alone, emphasizing the persistent challenges in maintaining digital security. While Cypher Protocol and other platforms assess and strengthen their security measures, the incident exposes the industry-wide necessity for constant vigilance.
Featured image from Stanford Online, chart from Tradingview.com
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Author: Scott Matherson