The decentralized finance (DeFi) protocol Defrost Finance suffered a hack in which it lost around US$ 12 million (R$ 62.54 million). But the hacker returned the funds after the team negotiated with him. According to Defrost, users will soon be able to claim their assets. Also Read: 4 Play-to-Earn Games to Play Even at the Bear Market
Defrost Finance hack attack
After the attack, analysts began to suspect that it was a rug pull hit. The term rug pull literally means “pull the rug”, and characterizes a situation in which the developers of a protocol abandon it. As a consequence of this, developers or project creators steal the funds and investors lose all invested capital. In the case of the Defrost Finance protocol, who warned about the possibility of rug pull was the blockchain security company PeckShield. Last Sunday (25), the company cited in its Twitter account information from the community that warned them about the alleged scam. The company further said that the attackers managed to get away with $12 million in user funds.
We received community intel warning the rugpull of @Defrost_Finance🇧🇷 Our analysis shows a fake collateral token is added and a malicious price oracle is used to liquidate current users. The loss is estimated to be >$12M. https://t.co/70iu38OYh7 pic.twitter.com/rSKklgV71I
—PeckShield Inc. (@peckshield) December 24, 2022
“We received information from the community warning about a rug pull on Defrost Finance. Our analysis shows that a fake collateral token was added and a malicious price oracle was used to liquidate current users. The loss is estimated at more than $12 million.” Security company CertiK also said this Monday that the hack was an exit scam, which consists exactly of making promises to investors and then “leaving” with their funds.
Defrost denies rug pull
The Defrost team acknowledged the hack last Sunday. As they said, on December 23, the protocol suffered a first hack via a flash loan attack (Lightning loan) that led to the drain of funds. Afterwards, it appears that the same (or another) hacker managed to steal the owner’s key for a second, much larger attack. The team then tweeted that they were willing to negotiate with the hacker(s) and offer 20% of the drained amount in exchange for most of the assets. “We are willing to discuss sharing 20% (tradable) of funds in exchange for most of the assets and urge hackers to contact us as soon as possible,” said the Defrost team. Then, just this Monday (26), the company published on its blog an article celebrating that the hacker returned the stolen funds. “Soon, we will start scanning the data on the network to find out who owned what before the hack, in order to return it to the rightful owners. Since different users had varying ratios of assets to debt, this process could take a while. However, we will complete it fairly quickly,” the team said.
