Solana, Nomad crypto wallets are hacked, with losses of tens of millions

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A couple of crypto hacks totaling nearly $ 200 million in losses and likely affecting more than 10,000 users have sparked concern in an industry already rocked by falling prices.

On Wednesday, Solana, a popular blockchain and token, said some wallets that held its assets had been hacked. At least 7,700 of these wallets are believed to be affected, the company said, while London-based blockchain analytics firm Elliptic has estimated the stolen amount at $ 5.2 million in cryptocurrencies, which includes Solana tokens and stablecoin. known as USD.

“An exploit allowed a malicious actor to drain funds from a series of portfolios on Solana,” the company She said via Twitter. “Engineers are currently working with multiple security researchers and ecosystem teams to identify the root cause of the exploit, which is currently unknown.”

The hack is believed to have caught on on wallets like Slope and Phantom. These are “hot wallets,” which are wallets that allow lightning-fast transactions because they are always connected to the internet, as opposed to “cold wallets”, which usually require a USB drive and have long periods of disconnection. Solana, which once had the fifth most popular token before a slide, has made a name for itself as a blockchain that can transfer funds extremely quickly.

The news follows Monday’s revelation of Nomad, a so-called blockchain bridge, which acknowledged that around $ 190 million had been stolen from it after a hacker infiltrated its system. The attack was known as “free for all” because the hacker’s original code allowed anyone to copy it and steal the crypto for themselves. No one knows where the money went.

Nomadic She said its executives were working with law enforcement and a blockchain data company called TRM Labs to locate the funds, with no updates as of Wednesday afternoon. He said they were working on “investigation / recovery” and “technical repairs”.

In an unusual move, the company earlier Wednesday provided an address to anyone who chose to grab the money with a noble act of protection.

“Dear white hat hackers and fellow ethical researchers who safeguarded the ETH / ERC-20 tokens, send the funds to the following wallet address on Ethereum,” he said on Twitter. It is not known whether any good Samaritan accepted the company of his offering.

A blockchain bridge allows consumers to trade cryptocurrencies from one blockchain to another, for example from bitcoin to ethereum, making it vulnerable to what security experts call “both sides”, weak points on both blockchains. These bridges also tend to be newer and, in some cases, more hastily designed. In March, another blockchain bridge known as Ronin was breached totaling more than $ 600 million in cryptocurrencies.

“To date, approximately $ 1.8 billion has been stolen from these services and it is worrying that their security standards do not seem to match the huge amounts of capital entrusted to them,” said Tom Robinson, co-founder and chief scientist of Elliptic in an email to the Washington Post, referring to the bridges.

Meanwhile, the Solana case has raised concern because it has been made vulnerable by factors beyond its control. While some argue that hacking doesn’t show any of the industry’s foundations to be shaky: “This wasn’t a fundamental blockchain problem, it probably looks like an app someone made was flawed,” cryptocurrency mogul Sam told Fortune. Bankman-Fried Wednesday. he pointed out to critics the interconnectedness of cryptographic networks and the inability of one party to fully control all the others.

While the hacks involved discrete entities, blockchain bridges and hot wallets also underscore what many cryptocurrency enthusiasts say is so appealing about form: ease of use. The former allows disparate blockchains to communicate, potentially just as essential for an upcoming technological age as, for example, people with AT&T and Verizon phone plans able to talk to each other were for an earlier era.

And cold storage, while safer, would seem to undermine what lies at the heart of cryptocurrency’s appeal, which is to allow transfers without the delays and waits of traditional banking transactions.

On social media Wednesday, many showed pictures of their wallets suddenly showing zero balances, while others questioned hot wallets. “So are you telling me that storing my entire equity on a Google Chrome extension would be considered a bad move?” a squirrel he wrote of Ghost.

But experts say the problem could be more serious than that. Finding solutions, they note, could mean making sacrifices within the goals envisioned by crypto idealists.

“One of the benefits of opening up the banking system in this way is speed and less barrier to transactions,” said William Callahan III, a former Drug Enforcement Administration Special Agent who now serves as the Director of Government and Strategic Affairs for a company called The Drug Enforcement Administration Blockchain Intelligence Group. “But what these hacks show is that we need to step back and question that idea of ​​accessibility, as speed is also part of the problem. We have to combine speed and safety “.

However, Callahan said, he believed such support was possible. “Blockchain bridges need to strengthen their protection, while perhaps consumers need to use more cold rooms,” he added.

The need for speed may diminish on its own when some people get out of cryptocurrency. Bitcoin, a strong barometer of crypto activity, lost 50% of its value in 2022 as investors lost the asset, although it saw a rebound from its price below $ 19,000 in June to hover around $ 23,000. in the last weeks.

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