Bessie Liu

Ledger was recently exploited for an estimated $610,000 —&nbsp; a reminder that security and privacy remain important priorities for the crypto ecosystem.



According to DeFiLlama, hackers have cost crypto startups and projects more than $1.3 billion in <a href="https://defillama.com/hacks">losses</a> this year. Since June 2016, on-chain losses have amounted to an estimated $7.54 billion, with $5.69 billion hacked in DeFi protocols.&nbsp;



Brian Pak, co-founder of Chainlight, told Blockworks that these exploits should be a fundamental reminder that security is still overlooked in much of the DeFi Ecosystem.



Read more: <a href="https://blockworks.co/news/ledger-wallet-vulnerability-connectkit">‘Wallet drainer’ code added to Ledger library has crypto on edge</a>



“As we enter into another bull market and liquidity starts to pour into the DeFi ecosystem, we can expect to see hacks like this happen more often,” Pak said. “It is of paramount importance that protocols take preemptive measures and are properly audited. Furthermore, builders must place more focus on security if the <a href="https://blockworks.co/tag/defi">DeFi</a> ecosystem is to flourish.&#8221;



With 2024 just around the corner, let&#8217;s look at the five largest exploits that occurred this year.



<h2 class="wp-block-heading">1. Mixin Network — $200 million</h2>



Hong Kong-based decentralized peer-to-peer network <a href="https://blockworks.co/news/mixin-network-200m-loss-hack">Mixin Network was exploited</a> for an estimated $200 million in September this year, making it one of the biggest hacks of the year.



Mixin has since released a new system with enhanced security features. It has also offered the hacker a bounty of $20 million in return for the stolen assets.&nbsp;



“Most of our platform assets were users, and we hope you can refund them,” the Mixin team <a href="https://etherscan.io/idm?addresses=0x548a73cab56eae3bffe15d591b409d18b66f1699,0x52e86988bd07447c596e9b0c7765f8500113104c&amp;type=1">wrote.</a> The company added in a <a href="https://twitter.com/MixinKernel/status/1730184333326270579">post</a> on X that the hacker could reach the team anonymously or through appropriate channels in order to return the compromised assets.



<h2 class="wp-block-heading">2. Euler Finance — $197 million</h2>



DeFi lending protocol Euler Finance was the victim of a flash loan attack that saw <a href="https://blockworks.co/news/euler-suffers-200m-exploit">$197 million stolen</a> after an attacker tricked the smart contracts into believing there were fewer collateral tokens than debt tokens.&nbsp;



Following the exploit, the Euler team offered a <a href="https://blockworks.co/news/euler-bounty-defi-flash-loan-attack">$1 million reward bounty</a> to ensure the attacker was arrested.&nbsp;



After a series of back-and-forth communications, the Euler attacker — who went by “Jacob” — returned <a href="https://twitter.com/eulerfinance/status/1643345907344379904">all</a> stolen funds to the Euler team.&nbsp;



<h2 class="wp-block-heading">3. Poloniex — $126 million</h2>



The Justin Sun-owned exchange Poloniex saw an estimated $126 million drained after hackers <a href="https://twitter.com/peckshield/status/1722931275764474329">gained</a> access to its hot wallets in mid-November.



Immediately after the hack, Sun wrote in a <a href="https://twitter.com/justinsuntron/status/1722942733680296246?s=20">post</a> on X that “Poloniex maintains a healthy financial position and will fully reimburse the affected funds,” and that the exchange was offering a 5% white hat <a href="https://twitter.com/justinsuntron/status/1722951876986204259">bounty</a> to the hacker in exchange for the stolen cryptocurrencies.



The hacker was given seven days to consider the offer before Sun would turn to law enforcement.&nbsp;



A month after the attacks, Poloniex has since <a href="https://support.poloniex.com/hc/en-us/articles/19536894469911-Poloniex-Resumes-Deposit-and-Withdrawal-Services-for-Certain-Cryptocurrencies-via-TRON-Network">resumed</a> withdrawal and deposit services for select tokens on the TRON network, including USDT, USDD, BTT, WIN, NFT, SUN, JST, USDJ and USDC.&nbsp;



<h2 class="wp-block-heading">4. Multichain — $126 million</h2>



Cross-chain bridge <a href="https://blockworks.co/tag/multichain">Multichain</a> saw a total of $126 million being <a href="https://blockworks.co/news/multichain-anyswap-exploit">moved from its bridges</a> to an unidentified address after its private keys were compromised.



Stolen funds had been transferred to different addresses and were not <a href="https://hackernoon.com/multichain-hack-and-its-consequences">withdrawn</a> or put through cryptocurrency mixers.&nbsp;



Soon after the attack, it was revealed that the company’s founder and CEO had been missing for a month, and it was suspected that <a href="https://blockworks.co/news/multichain-ceo-missing-trust-reserve">Chinese authorities had arrested him</a>.&nbsp;



Multichain services have stopped indefinitely, and the team has <a href="https://twitter.com/MultichainOrg/status/1677180114227056641">urged</a> users not to use any multichain bridges.&nbsp;



<h2 class="wp-block-heading">5. Atomic Wallet — $100 million</h2>



North Korean hackers stole an estimated $100 million from Atomic Wallet after an estimated 5,000 crypto wallets were compromised, with one particular wallet losing over $1 million in <a href="https://www.elliptic.co/blog/analysis/north-korea-linked-atomic-wallet-heist-tops-100-million">funds</a>.&nbsp; After failing to address the incident and <a href="https://twitter.com/tayvano_/status/1678835470980251648">downplaying</a> its urgency, a group of investors have since <a href="https://www.intellinews.com/russian-investors-launch-action-after-being-stung-in-100mn-crypto-heist-288989/?source=russia">sued</a> the wallet provider.



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exploit

The 5 biggest DeFi hacks of 2023

Macauley Peterson

Cryptocurrency exchange Poloniex suffered unauthorized withdrawals beginning at around 5:30 am ET Friday.



The withdrawals from Poloniex include millions of dollars worth of ether (<a href="https://blockworks.co/price/eth">ETH</a>), tron (<a href="https://blockworks.co/price/trx">TRX</a>) stablecoins (<a href="https://blockworks.co/price/usdt">USDT</a>/<a href="https://blockworks.co/price/usdc">USDC</a>) and chainlink (<a href="https://blockworks.co/price/link">LINK</a>), plus more than 250 other tokens with aggregate values between $1,000 to $800,000 at the time of the theft.



A total of $23 million <a href="https://debank.com/profile/0x0a5984f86200415894821bfefc1c1de036dbf9e7">remains</a> in the attacker’s primary wallet, but much of the haul has been transferred elsewhere, including $11 million in USDT, <a href="https://debank.com/profile/0x5c2aeb0bc2f6597470698b3b31f606c74c5ec551/history">exchanged</a> for ether.



Security firm PeckShield first <a href="https://x.com/peckshield/status/1722931275764474329?s=20">reported</a> the suspicious transactions. Justin Sun, a major investor in Poloniex <a href="https://x.com/justinsuntron/status/1722942733680296246?s=20">confirmed</a> the incident on X: “Poloniex maintains a healthy financial position and will fully reimburse the affected funds. Additionally, we are exploring opportunities for collaboration with other exchanges to facilitate the recovery of these funds,” Sun said.



Earlier, the exchange’s X account <a href="https://x.com/PoloSupport/status/1722934043543752968?s=20">wrote</a>, “our wallet has been disabled for maintenance,” but it subsequently reposted Sun’s account. On-chain data analytics platforms Nansen and Arkham Intelligence observed substantial net outflows from the exchange:



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"> <a href="https://t.co/R3hHPsRUpH">pic.twitter.com/R3hHPsRUpH</a>&mdash; Nansen 🧭 (@nansen_ai) <a href="https://twitter.com/nansen_ai/status/1722944792147984521?ref_src=twsrc%5Etfw">November 10, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Arkham, <a href="https://platform.arkhamintelligence.com/explorer/entity/e8f48f1e-8c7e-49bf-8e45-e127edd929b2">tracking</a> the flow of funds, puts the loss at closer to $100 million, monitoring $31.8 million in ETH, $28.3 million in TRX and $13.8 million in BTC.



The attack appears to have been <a href="https://etherscan.io/tx/0xcbf1547119ae869604585997b11d118bb423f32ae75c2fe055b7eb8d79d3ae77">initiated</a> by a withdrawal of 4,900 ETH (about $10 million) from the exchange, followed by a flurry of withdrawals continuing until 6:40 am ET.



<a href="https://blockworks.co/tag/poloniex">Poloniex</a> subsequently <a href="https://twitter.com/Poloniex/status/1722956238160536049">offered</a> the &#8220;Poloniex hacker&#8221; a 5% &#8220;white hat bounty&#8221; if the funds are returned within 7 days.



Earlier this year, the exchange <a href="https://blockworks.co/news/poloniex-settles-with-ofac">settled with the US Treasury&#8217;s Office of Foreign Assets Control</a> for $7.6 million over sanctions violations.



Justin Sun has <a href="https://blockworks.co/news/huobi-founder-sells-100-stake-to-justin-sun-fund-report">controlling stakes in both Poloniex and Huobi</a> crypto exchanges and founded the <a href="https://blockworks.co/tag/tron">Tron network</a>.



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hack

Poloniex wallets drained of as much as $100 million in crypto assets

Sebastian Sinclair

Crypto exchange Poloniex has agreed to pay over $7.5 million to settle charges related to tens of thousands of sanctions violations with the Office of Foreign Assets Control (OFAC). The violations are alleged to have occurred over a period of more than four years.



The Delaware-based company has agreed to pay more than $7,591,000 to settle its potential civil liability for 65,942 violations that occurred between September 2015 and November 2019.



OFAC accused <a href="https://blockworks.co/tag/poloniex" target="_blank" rel="noreferrer noopener">Poloniex</a> of allowing customers in sanctioned jurisdictions to engage in digital asset-related transactions, despite having reason to know their location through know-your-customer information and internet protocol address data. 



These transactions amounted to a combined value of $15.3 million across 232 customers from sanctioned jurisdictions including Cuba, Iran, Sudan, Syria and Crimea, according to a <a href="https://ofac.treasury.gov/media/931701/download?inline">statement</a> from the Treasury Department on Monday.



Poloniex later halted trading by US residents in November 2019 before being sold to Polo Digital Assets, an &#8220;Asian-backed&#8221; investment group that included the likes of Tron’s <a href="https://blockworks.co/tag/justin-sun" target="_blank" rel="noreferrer noopener">Justin Sun</a>.



OFAC found that while Poloniex did not voluntarily disclose its apparent violations of sanctions programs, the violations were not considered to be especially severe or harmful.



Circle Internet Financial Limited acquired Poloniex in 2018 and implemented additional internal sanctions compliance controls that were found to have reduced the rate of violations.&nbsp;



Certain violations persisted in the 12 months that followed, mainly the result of a small number of accounts opened by people located in Crimea, the US Treasury said.



The enforcement release describes the alleged violations in detail and highlights the significance of using all available location-related information to create a risk-based sanctions compliance program.&nbsp;



This approach is essential to minimize the risk of offering services to individuals in sanctioned jurisdictions, the Treasury said.



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OFAC

Poloniex Settles With OFAC for $7.6M Over Sanctions Violations

Jack Kubinec

<div id="highlights-block_62f64485b1178" class="highlights">
 <ul>
 <li>“Justin Sun wants to sow dissent, confusion and FUD in order for him to benefit financially,” one former ETH Foundation member said</li>
 <li>Low trade volumes and sinking prices have set Poloniex&#8217;s Ethereum fork tokens on a rocky path </li>
 </ul>
 
</div>



Figures around crypto <a href="https://cms.blockworks.co/ethereum-proof-of-work-fork-proposal-is-a-retail-trap-researchers-say/" target="_blank" rel="noreferrer noopener">have eye-rolled</a> at recent interest in a proof-of-work (PoW) Ethereum hard fork ahead of <a href="https://cms.blockworks.co/the-investors-guide-to-the-ethereum-merge/" target="_blank" rel="noreferrer noopener">the blockchain’s Merge to proof-of-stake</a> (PoS). Not Justin Sun.



The prominent — and deep-pocketed — figure stands defiantly in support of a long-lasting Ethereum blockchain powered by PoW.



Sun, the flamboyant founder of the <a href="https://cms.blockworks.co/tag/tron/" target="_blank" rel="noreferrer noopener">Tron network</a>, is waging a media campaign in support of a contentious Ethereum hard fork.



On Monday, Sun listed an IOU token representative of an eventual PoW-powered ether, ETHW, on his Poloniex exchange, despite the Merge still being about a month away. Current ETH holders can deposit their real ether onto Poloniex and receive ETHW and another token, ETHS, the latter denoted as PoS-powered ether.


<div class="wp-block-image">
<figure class="alignright size-medium"><img loading="lazy" decoding="async" width="300" height="207" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg" alt="JUSTIN SUN, FOUNDER OF TRON AND CEO OF BITTORRENT" class="wp-image-6365" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg?w=372 372w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg?w=378 378w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg?w=317 317w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/justin-sun-300x207.jpeg?w=600 600w" sizes="auto, (max-width: 300px) 100vw, 300px" /><figcaption>Justin Sun, Tron founder and BitTorrent CEO</figcaption></figure></div>


Sun floated the possibility of <a href="https://twitter.com/justinsuntron/status/1555112296006922240?s=20&amp;t=BvxOZwt9lGb1GJ42cT_ZJA" target="_blank" rel="noreferrer noopener">airdropping ETHW tokens</a> to developers who switched to the PoW chain. The entrepreneur’s freewheeling spending habits and rivalry with Ethereum make his interest in unsettling its ecosystem unsurprising, but the crypto influencer is struggling to sow doubt in PoS ahead of the Merge.



Three other crypto exchanges have listed ETHW and ETHS since Poloniex debuted the pair on Monday, Gate.io, MEXC and Digifinex, while BitMEX is readying to open trade, complete with leverage, in the next few days.



ETHW has bombed already, currently trading below half its all-time high recorded just after its listing, at around $71 as of 8:00 am ET — a whopping 96% below ether, which has climbed more than 10% since Monday.



ETHS has stuck closer to ether, however it still lags ETH by 4%, indicating those who’ve taken Sun up on his gambit are mostly dumping their tokens before the Merge — ETHW especially so.



The supporting platforms have altogether reported about $108 million in trade for the ether fork tokens so far, split evenly between the two, per CoinGecko. Poloniex and MEXC reported more than 90% of that volume.



<h3 class="wp-block-heading">Justin Sun sewing Ethereum discord is on brand</h3>



Years before Tron, Sun founded an app named Peiwo aiming to become China&#8217;s answer to Snapchat, but the platform <a href="https://www.scmp.com/tech/apps-social/article/3020282/cryptocurrency-entrepreneur-justin-sun-ran-hook-app-his-us46" target="_blank" rel="noreferrer noopener">evolved</a> into more of a dating app.



Sun has butted heads with the Ethereum camp since he entered crypto in 2017. Insiders say Tron initially <a href="https://www.plagiarismtoday.com/2018/02/01/the-multi-billion-dollar-plagiarism-scandal/" target="_blank" rel="noreferrer noopener">leveraged</a> a Java implementation of the Ethereum client for its own software, and Sun has been criticized for allegedly plagiarizing the Filecoin and IPFS white papers, including a <a href="https://twitter.com/VitalikButerin/status/982194680258486273" target="_blank" rel="noreferrer noopener">dig</a> directly from Ethereum co-founder Vitalik Buterin.



Nevertheless, Tron&#8217;s native token, TRX, is the 17th largest cryptocurrency by market value, boasting capitalization of $14 billion at its peak in 2018. Ether&#8217;s market value sits at almost $238 billion, second behind bitcoin&#8217;s $467 billion.



Sun’s wealth — fueled by TRX — has become the backbone of his personal brand.&nbsp;In 2018, he bought BitTorrent for $120 million in a cash <a href="https://www.engadget.com/2018-07-25-blockchain-company-tron-buys-bittorrent.html?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAAIJ29pytQL3dyGikrxG7FglvybWIcVbVkqMikM5lEiycvex7IpYTCwRA0pC4_jZLo0fSur003bOT2WXmxkxF7-rkowXbSqTSh8m84vGuCFCRxD76lKv6-UxdF0hxo5OLcFJpayUYGafT-6Xk3dEzONYoQw96Y5z9QzM1n2h8k_S3" target="_blank" rel="noreferrer noopener">deal</a>, a move to bring users of the peer-to-peer torrenting tool under the Tron umbrella. 



In 2019, he paid $4.6 million to have <a href="https://www.wsj.com/articles/warren-buffett-finally-sits-down-for-4-6-million-charity-meal-11581014466" target="_blank" rel="noreferrer noopener">lunch</a> with Warren Buffett. In 2020, Sun <a href="https://www.artnews.com/art-news/market/justin-sun-picasso-warhol-christies-buyer-1234588521/" target="_blank" rel="noreferrer noopener">spent</a> $20 million on a Picasso and $6 million on a <a href="https://twitter.com/justinsuntron/status/1398261268159426566" target="_blank" rel="noreferrer noopener">Beeple</a> NFT, having <a href="https://twitter.com/justinsuntron/status/1370226049208836100" target="_blank" rel="noreferrer noopener">underbid</a> the $69 million Beeple auction won by another crypto entrepreneur.



And last December, Sun <a href="https://www.washingtonpost.com/business/2021/12/22/justin-sun-blue-origin/" target="_blank" rel="noreferrer noopener">sunk</a> $28 million for a spot on one of Jeff Bezos’ Blue Origin spaceship flights, although the trip hasn&#8217;t yet occurred. During this year’s crypto crash, <a href="https://cms.blockworks.co/sun-says-he-may-spend-5b-to-save-crypto-even-as-usdd-fights-to-hold-peg/" target="_blank" rel="noreferrer noopener">Sun pledged up to $5 billion</a> in mergers to save illiquid crypto firms, mimicking <a href="https://cms.blockworks.co/sam-bankman-fried-out-to-win-whole-crypto-market-early-ftx-backer-says/" target="_blank" rel="noreferrer noopener">FTX billionaire Sam Bankman-Fried</a>.&nbsp;



But many in the industry criticize Sun for amassing his wealth, estimated in the hundreds of millions to billions, through hype instead of innovation.



“Sun would partner with a toaster if he thought it would pump the price of Tron,” Daniel Keller, co-founder of Web3 computing company Flux, told Blockworks. “It’s all about the marketing and very little about the technology.”



Blockworks reached out to Sun for comment but did not receive a reply by press time.



<h3 class="wp-block-heading">Poloniex could benefit from a contentious hard fork</h3>



Tron is the second-largest blockchain by total value locked inside decentralized finance dapps (decentralized apps), according to DeFiLlama, with nearly $6 billion.



No. 1 Ethereum has nearly seven times more, and Sun has not been shy about his desire to dethrone it. Sun repeatedly casts Tron as the same as Ethereum but with faster and cheaper transactions.



Sun also has a long-standing rivalry with Buterin. The pair have repeatedly exchanged jabs on <a href="https://twitter.com/VitalikButerin/status/1039697887054053376?s=20&amp;t=G77jP_qWk9ieUvh2eEk1sA" target="_blank" rel="noreferrer noopener">Twitter</a>, and Sun even <a href="https://decrypt.co/5943/justin-sun-crashes-vitalik-buterin-speech" target="_blank" rel="noreferrer noopener">interrupted</a> a Buterin keynote in 2019, accompanied by a person in a Tron-branded avocado costume.&nbsp;



The 32-year-old founder retired from his formal position at Tron at the end of last year to take up an ambassador post for the Caribbean island of Grenada — technically <a href="https://protos.com/sun-grenada-his-excellency-justin-crypto-tron-diplomatic-immunity-switzerland/" target="_blank" rel="noreferrer noopener">granting</a> him diplomatic immunity in Switzerland under certain circumstances.



His past squabbles with Ethereum still lead many to question Sun’s motives in supporting a contentious PoW Ethereum fork.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Why <a href="https://twitter.com/hashtag/TRON?src=hash&amp;ref_src=twsrc%5Etfw">#TRON</a> is better than <a href="https://twitter.com/hashtag/ETH?src=hash&amp;ref_src=twsrc%5Etfw">#ETH</a>: 1. 2000TPS vs. 25TPS 2. Popular sovereignty of token vs. Authoritarian rules 3. 100M Dapp users vs. Thousands 4. None fees vs. High fees 5. Coin burn vs. No coin burn 6. $2B bonus vs. Zero 7. High scalability vs Poor scalability <a href="https://twitter.com/hashtag/TRX?src=hash&amp;ref_src=twsrc%5Etfw">#TRX</a> <a href="https://twitter.com/search?q=%24TRX&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$TRX</a> <a href="https://t.co/W7jEjmx0wp">pic.twitter.com/W7jEjmx0wp</a>&mdash; H.E. Justin Sun🌞🇬🇩 (@justinsuntron) <a href="https://twitter.com/justinsuntron/status/1002542868005732353?ref_src=twsrc%5Etfw">June 1, 2018</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Justin Sun wants to sow dissent, confusion, and FUD [fear, uncertainty, doubt] in order for him to benefit financially,” Hudson Jameson, a former Ethereum developer liaison, said in a Twitter DM.&nbsp;



Sun denies these claims, tweeting this week that his support for an ETH hard fork is “solely for the public good and not for profit at all.” Sun’s Poloniex would hypothetically stand to gain from a successful ETHW launch on Poloniex, which has seen its daily trading volume fall by more than half over the past year, <a href="https://www.coingecko.com/en/exchanges/poloniex#statistics" target="_blank" rel="noreferrer noopener">per CoinGecko</a>.



A representative for Poloniex said the exchange holds the same views as Sun regarding the Ethereum hard fork and is not profiting from ETHW due to the platform&#8217;s zero-fee trading.



“This is more of a ploy for him to bring people to Poloniex than for him to grow out this [PoW] model,” Flux’s Keller said. “All the technology that has to be built on this new iteration should have been done two years ago.”



Trading volumes and sinking prices indicate ether holders aren’t buying Sun’s narrative. His seemingly ill-fated attempt to divide Ethereum may indicate the public’s reduced appetite for charismatic crypto influencers of Sun’s ilk. 



Terra’s <a href="https://cms.blockworks.co/terra-looking-to-build-daos/" target="_blank" rel="noreferrer noopener">Do Kwon</a> and Celsius’ <a href="https://www.coindesk.com/layer2/2022/07/27/sky-high-yields-and-bright-red-flags-how-alex-mashinsky-went-from-bashing-banks-to-bankrupting-celsius/" target="_blank" rel="noreferrer noopener">Alex Mashinsky</a> both threw boisterous public personas behind their business interests before meeting spectacular meltdowns.&nbsp;



“What we’re starting to see is a more educated blockchain community,” Keller said, adding that investors will need to be more scrupulous ahead of the next bull market. “Make no mistake, there will be more Justin Suns.&#8221;



In any case, ether is gaining momentum as ETHW flounders. ETH topped $1,900 on Thursday for the first time in nine weeks after the protocol’s final test before the Merge, which occurred on the <a href="https://cms.blockworks.co/ethereum-steps-closer-to-pos-as-goerli-testnet-merge-goes-live/" target="_blank" rel="noreferrer noopener">Goerli testnet</a>, was successful.



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