Hedgey Finance, a provider of on-chain token infrastructure, recently fell victim to two separate exploits, as attackers took advantage of a bug in its token claims contract.
Security firm Cyvers reported that the first attack took place on April 19th, affecting both the Ethereum (ETH) and Arbitrum (ARB) blockchains. During this incident, hackers managed to steal approximately $1.9 million in cryptocurrency. Analysis of on-chain data revealed that the attacker’s address received funds from the web3 crypto exchange ChangeNOW, and the stolen funds were later converted into Maker’s stablecoin DAI.
Following the breach, Hedgey Finance released a statement acknowledging the incident and stated that an investigation was underway. Users were urged to revoke token claim permissions as a precautionary measure until further notice.
The protocol developed by Hedgey Finance allows for the creation of options markets for digital assets, enabling users to trade calls and puts on cryptocurrencies issued on EVM-compatible chains. Unlike traditional platforms, there are no listing requirements, and users can engage in ERC20 options trading directly with one another.
Shortly after the initial attack, Cyvers issued a subsequent alert reporting a second exploit on the Arbitrum network. In this instance, hackers managed to siphon off $42.8 million, transferring some of the stolen funds to the exchange Bybit. The attackers exploited the same vulnerability in Hedgey Finance’s system on both Ethereum and Arbitrum.
The incidents involving Hedgey Finance underscore the importance of prioritizing security measures within the DeFi sector. As the popularity of cryptocurrency grows, ensuring on-chain security will continue to be a top priority for industry veterans and newcomers alike. While there has been a decrease in the number of hacks, it is essential for protocols to allocate resources and expertise towards safeguarding DeFi platforms.
In a recent report, Peckshield highlighted a 50% decrease in crypto exploits, resulting in smaller losses for investors. Additionally, white hat experts have established a help desk to report hacks in real-time and share information on exploit strategies.
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