Hope Finance, an Arbitrum based decentralized finance (DeFi) project, fell prey to cyber criminals who drained nearly $2 million worth of user funds.
The crypto market has long been subject to attacks, and the decentralized finance (DeFi) market has been especially vulnerable to them. Attackers are increasingly targetting DeFi platforms and using more sophisticated tools to carry out these exploits. As per blockchain analysis firm, Chainalysis, hackers from all around the world had an extraordinary previous year in terms of hacks on crypto platforms.
The blockchain company identified a whopping $3.8 billion in cryptocurrency hacks last year, which is 15% up from 2021 and dramatically up from the $0.5 billion stolen in 2020. Experts believe investestors need to be more cautious as the attacks will increase as the days go by.
In a statement, Dmitry Mishunin, CEO at crypto auditing firm HashEx, explained the amount of value in some DeFi projects made the industry “very attractive” to malicious actors and that the number of hacks “is only going to grow going forward.” He added,
“The crypto industry is still relatively new, and everyone is growing with each other, so it’s difficult to get too far ahead of bad actors.”
Another DeFi Protocol Under Attack
#CommunityAlert 🚨@hope_fin have announced the community has been scammed for ~$2m making this the largest #exitscam on Arbitrum in 2023.
$1.86m was transferred to @TornadoCash.
Hope_fin have posted steps for user's to withdraw their staked LPhttps://t.co/hJbFXiKujt
— CertiK Alert (@CertiKAlert) February 21, 2023
On February 21, Web3 security firm CertiK issued a warning following an announcement from the Hope Finance Twitter account notifying users that they had been scammed. The DeFi protocol alleged that the hacker who scammed its community was a Nigerian named “Ugwoke Pascal Chukwuebuka”, while sharing his photograph with a voter’s card.
#PeckShiedAlert ~1,095 $ETH (~$1.86M) already into Tornado Cash from @Hope_fin scammer https://t.co/qXRtaMg9iX
— PeckShieldAlert (@PeckShieldAlert) February 21, 2023
As per blockchain security firm, Peckshield, the perpetrator transferred nearly 1095 Ethereum (ETH) through Tornado Cash’s mixing protocol. CertiK also reported the scammer had changed details of the smart contract which led to funds being drained from Hope Finance genesis protocol. Following the scam, Hope Finance urged users to withdraw staked liquidity from the protocol through an emergency withdrawal function.
DeFi Attacks on the Rise
Since the news broke out, several community members flocked to Twitter to express exasperation. A user named Marukk alleged that the Hope Finance hack was a rug pull. Another user claimed the address on the perpetrator’s ID “looks like a vacant lot” when checked via Google Maps.
Wonder if that ID is altered. The word RUMUIGBO is not aligned with the rest of the words on the card.
Sucks that there’s still scammers that can get away with stuff like this. Really, really need to emphasize trust and longterm reputation of a protocol before investing. 🙁
— Markuu (@Markuu6ix) February 20, 2023
On December 10, Lodestar Finance, an Arbitrum-based lending platform, was attacked resulting in a loss of roughly $6.9 million. Previously in October, Mango Markets, a DeFi trading platform on the Solana blockchain was drained of a whopping $100 million using a flash loan to manipulate spot prices for profit.