Cypher Protocol Freezes $600K Worth of Stolen Crypto Assets

Cypher Protocol Freezes $600K Worth of Stolen Crypto Assets

Cypher Protocol has recently managed to freeze $600k worth of cryptocurrency following an exploit that struck the platform on Aug 7. As per the platform’s tweet on X, more than half of the funds stolen as a result of the security exploit have been frozen across several centralized exchanges with the help of several independent blockchain investigators. Currently, the return of these funds would depend upon the cooperation levels of these centralized exchanges as well as seizure warrants being issued by law enforcement authorities, yet they will still try to follow up their step-by-step resolution for doing so.

Cypher Protocol enables both lending and borrowing via primary accounts with several cross-collateralized subaccounts. Unfortunately, the vulnerabilities blocked the proper tracking of the isolated subaccounts along with insufficient margin checks before borrowing. Furthermore, the responsible exploiter took advantage of these code vulnerabilities and used multiple wallets to drain approximately $1 million in numerous crypto assets that include UDST, USDC, SOL, wETH, and several other altcoins.

Cypher Protocol Thanks Blockchain investigators for the help

The situation surrounding Cypher Protocol took a surprising turn when the team managed to make contact with the hacker following the offer of a 10% white hat bounty accounting for almost $120,000. Just two days after the announcement, the team announced that the exploiter missed the deadline for returning the funds, and the bounty was now opened to the public.

At the same time, Cypher Protocol also hinted at knowing the possible identity of the exploiter. The protocol recently announced a redemption plan and a socialized losses policy to distribute the remaining assets to affected users. A redemption package along with protocol assets would be distributed depending on user share.

Following the freezing of the funds, Cypher Protocol issued a statement thanking the investigators, especially the blockchain sleuth, ZachXBT. The protocol highlighted how they were increasingly invaluable to the team and how their efforts played a major role in the initial freezing of funds across several centralized exchanges. It was also highlighted how ZachXBT also aided in tracking the attacker.

Based on the information shared by the De.Fi rekt database, the Cypher Protocol exploit was not the largest throughout August. The DeFi protocol Zunami suffered a $2.1 million flash loan attack whereas the leveraged yield aggregation platform Steadefi was exploited for $1.1 million.