Hacks/Chaos in crypto markets 2022

The crypto-economy of 2022

With a variety of things occurring, 2022 has been a particularly crucial year for the cryptocurrency market. These have happened as the market is going through yet another crypto winter, with the values of the majority of assets barely rising above support levels. As a result, several investors have grown despondent over the market's current position.
Even though 2022 has witnessed a lot of events, certain trends have emerged recently. These themes—crypto hacks, low volatility, and green tokens—seem to be continuing as we move closer to the end of the year. Hackers have always focused on the market, but there are sporadic periods of minimal volatility. The final issue regarding green tokens, however, might have the biggest long-term impact on the market.

Besides the crypto winter, one of the most frequently discussed events in the market in 2022 relates to hacks. Unfortunately, there have been several such incidents this year, resulting in billions of dollars lost. Blockchain analysis firm Chainalysis estimates that over $3 billion was stolen in 2022, which would put previous years to shame.

Market enthusiasts would have been hoping that there would have been fewer hacks in October, but that’s not the case. This month was the worst month yet for DeFi protocols, with over $700 million stolen across 11 hacks, according to Chainalysis.

Bad actors now prefer cross-chain bridges over any other option, accounting for 82% of all assets taken in October. The Binance Smart Chain bridge breach was a well-publicized incident that brought attention to these systems' weaknesses.

The year 2022's hacking history

According to a report by Immunefi, the web3 ecosystem had a "loss" of almost $1.23 billion in the first quarter of 2022.
According to the report, this amount is an increase of 695 percent over the quarter-ago quarter's losses of $154.6 million.

As of April 4, several DeFi protocols have around $230 billion in total value locked (TVL). According to information from DefiLlama, that TVL is 170% more than the date one year ago, when it was $84.91 billion.

According to a report by Immunefi, the web3 ecosystem had a "loss" of almost $1.23 billion in the first quarter of 2022.

According to the report, this amount is an increase of 695 percent over the quarter-ago quarter's losses of $154.6 million.
As of April 4, several DeFi protocols have around $230 billion in total value locked (TVL). According to information from DefiLlama, that TVL is 170% more than the date one year ago, when it was $84.91 billion.

With losses totaling over $718 million, October alone has become the worst month ever for crimes involving cryptocurrencies. The amount taken from various decentralized finance (DeFi) protocols across 11 different attacks was noted in data provided by Chainalysis last week.

Mango Markets Hack

The Solana blockchain's decentralized finance (DeFi) trading platform Mango Markets has been the most recent target of hackers, who stole $117 million from it. Mango Market said in a tweet that the hack was the result of price-fixing on the local MNGO token.

To lessen the impact of the attack, the platform stopped all operations and stopped all deposits and withdrawals.
Blockchain security company OtterSec, which discovered the assault, claims the attacker used the MNGO token's price oracle data to obtain "large" uncollateralized crypto loans from the Mango Treasury.

An oracle is a device that provides the blockchain with pertinent off-chain data so that smart contracts can use it. A price oracle displays a digital asset's price data.

The USDC stablecoin was used as the price reference for an MNGO perpetual swap, but there was little liquidity between MNGO and it on the exchange market.

Following the incident, the hacker who carried out the attack requested payment, considering any unpaid amount to be insurance and a bug reward. The community treasury, worth 70,000,000 USD Coin (or $70,000,000), will be used to pay for this.

In addition, the hacker has made a settlement offer, requesting that users who support it agree to pay the bounty, settle the bad debt with the Treasury, waive all claims against accounts with bad debt, and avoid any criminal investigations.

Gala Hacks

After what has been referred to as a "multi-billion dollar exploit," Gala Games (GALA) is attempting to allay "FUD" (fear, uncertainty, and doubt).

The blockchain gamefi business has assured its users on Twitter that this was only routine and the price is rising.

An alleged attacker created $2 billion worth of GALA on Nov. 3 and sold some of the tokens on PancakeSwap, earning a total of 12,977 BNB, which was worth about $4.5 million at the time. This reduced the value of the tokens and depleted a PancakeSwap pool.

Huobi Global, a cryptocurrency exchange platform, stated the GALA event that happened on November 3 and caused a 20% drop in the price of the GALA token. The bitcoin exchange adds that this incident was a hostile hack motivated by profit and ill faith, not a "white operation."

Huobi Global said that pNetwork, the maker of the GALA tokens and a provider of DeFi routing infrastructure and gaming tokens, never informed Huobi of its plans to exploit the misconfiguration vulnerability by issuing worthless tokens valued at $1 billion.

As both the pNetwork and GALA teams were aware of the disastrous consequences of the operation, Huobi claimed that minting such a large number of tokens was "groundless and farfetched." The statement went on to claim that pNetwork's breach was concealed as a "white hat" to avoid legal repercussions.

The world's top virtual asset trading platform issued an apology to all exchange users who had been wronged by pNetwork's actions and promised to defend their rights and property by assembling the victims, acting as their representatives in class action lawsuits, and filing police reports to pursue criminal charges against the pNetwork perpetrators.

FTX Hack

Leading centralized cryptocurrency exchange FTX Exchange is known for its expertise in derivatives and leveraged products. It is the second-largest cryptocurrency exchange in the entire world.

According to Elliptic Enterprises, a crypto analytics company, the assets were removed from the network under "strange circumstances," according to a Wall Street Journal (WSJ) story that stated that more than $500 million (€482 million) in cryptocurrency funds looked to be missing.

ZachXBT noted in a message to The Washington Post, "The attacker removed assets from FTX/FTX U.S. and started selling them for assets that can't be blocked." The remaining assets appear to have thereafter started to be saved by FTX personnel.

The hacked assets were able to be frozen by some crypto companies, rendering them useless, he continued. The dollar-pegged cryptocurrency Tether was able to freeze around $31 million.

In his opinion, it is still unclear whether the attacker had insider knowledge of FTX's computer systems. (The blockchain, the analysis's chosen digital ledger, does not provide individually identifying information.) According to some experts, when a business shuts down swiftly, security may be left insufficient, giving opportunistic hackers an advantage.

Since a verified account was used at Kraken and FTX was advising customers not to use the app, outside security experts stated that an insider was likely involved, either as a perpetrator or as a victim whose credentials were compromised and used as a stepping stone in the attack.

Conclusion

Given that more than 300 bitcoin companies have entered the market as a result of DeFi's success, fraudsters now have access to a new, lucrative avenue. Even though smaller exchanges have been launched, which may not have the cybersecurity personnel required to secure their new ecosystems, blockchain is widely believed to be a secure technology. The code for these platforms is frequently publicly accessible, which provides attackers with plenty of time to plan attacks, as was the case with the Wormhole hack, which was the second-largest of its kind after the Poly Network heist, which cost that cryptocurrency platform more than $600 million (the dhacker later returned all of the funds).