After Bitcoin’s launch in 2009, a robust industry blossomed, stemming from the asset, its concept and its underlying technology. The crypto and blockchain space boasts different niches in which projects and companies develop solutions for various use cases.
One such niche is the decentralized finance (DeFi) sector, which was created as an alternative to traditional financial services. More specifically, DeFi consists of smart contracts, which, in turn, power decentralized applications (DApps) and protocols. Many of the initial DeFi applications were built on Ethereum, and the majority of the ecosystem’s total value locked (TVL) remains concentrated there.
For this comparison, commercial banks will be used as an example. In the traditional world, you may use financial institutions to store your money, borrow capital, earn interest, send transactions, etc. Commercial banks carry a lengthy, proven history of performance. Commercial banks can provide insurance and have security measures in place to ward off and protect against theft.
On the other hand, such establishments hold and control your assets to a degree. You are limited by banking hours for particular actions, and transactions can be cumbersome, requiring settlement times on the back end. Additionally, commercial banks require specific customer details and identifying documents for participation.
DeFi is a segment that comprises financial products and services that are accessible to anyone with an internet connection and operates without the involvement of banks or any other third-party firms. The decentralized financial market doesn’t sleep and therefore, transactions take place 24/7 in near real-time, while no intermediary has the power to stop them. You can store your crypto on computers, in hardware wallets, and elsewhere, and gain access at any time.
Bitcoin and most other cryptocurrencies hold these characteristics due to the underlying technology that backs these assets.
Bitcoin (BTC) carries qualities touted as pillars of decentralization. DeFi, however, expands on those qualities, adding additional capabilities.
A subcategory within the broader crypto space, DeFi offers many of the services of the mainstream financial world in a fashion controlled by the masses instead of a central entity or entities.
Lending may have: Attacker drains $800K from DeFi protocol Sturdy Finance
The lending platform responded by pausing all markets and assuring its community that no additional funds were at risk.
Worth almost $800,000 when writing, to a security exploit. The attacker exploited a vulnerability that eventually manipulated a faulty price oracle, allowing them to drain funds from the protocol.
On June 12, blockchain security firm PeckShield alerted Sturdy Finance and reported a transaction that seemed to be related to price manipulation. Almost an hour later, the DeFi protocol said that they were aware of the exploit and responded by pausing all their markets and assuring its users that no additional funds were at risk. Despite a swift response from the DeFi lending platform, PeckShield confirmed that the attacker was able to transfer almost $800,000 in ETH to the crypto mixer Tornado Cash. The security firm also noted that the “root cause” of the exploit was a faulty price oracle.
The blockchain security company BlockSec highlighted that the hack was done through a reentrancy attack, which is a common method hackers use to withdraw funds from DeFi protocols.
Through the method, hackers exploit the ability to repeatedly call a function in a single transaction before the initial function call is complete. With this, hackers can withdraw more funds than should be possible.
Meanwhile, scammers were able to take control of eight Twitter accounts of prominent crypto community members and promote crypto scams. According to blockchain detective ZachXBT, the scammers have stolen almost $1 million in crypto after taking control of the accounts of famous DJ Steve Aoki, Pudgy Penguins founder Cole Villemain, and even crypto hater Peter Schiff.
In other news, the United States Justice Department has recently charged two men who are allegedly involved in the Mt. Gox hack.
The United States Justice Department has unsealed charges against two men it says are responsible for the $400 million hack of former Bitcoin exchange Mt. Gox.
Bilyuchenko is also charged with conspiring to operate the BTC-e exchange, which was shut down in 2017 due to money laundering allegations. Prosecutors claim the hack occurred over a period of more than a year, from September 2011 until at least May 2014. During this time, the two men allegedly gained control of a Mt. Gox server located in Japan. They then proceeded to periodically make transfers of BTC from Mt. Gox to themselves until the “vast majority” of customers’ BTC had been drained from the exchange, prosecutors say.
To facilitate these sales, the two men entered into an allegedly fraudulent contract with a Bitcoin brokerage firm located in New York. The brokerage firm purchased the stolen BTC from the hackers by sending wire transfers to various offshore bank accounts, prosecutors argue. The Bitcoin was left in the possession of the alleged hackers’ exchange but was credited to the brokerage firm’s account within it.
The announcement does not say whether BTC-e was the exchange used in the fraudulent deal, instead referring to the exchange used as “Exchange-1.” Prosecutors claim that the pair received approximately $6.6 million from the deal.Mt. Gox was one of the first major cryptocurrency exchanges. It filed for bankruptcy in March 2014 after claiming the hack pushed it into insolvency.
BTC-e operated from 2011 to 2017. In 2017, the FBI liquidated some of the exchange’s cryptocurrency, claiming that the funds were earned through money laundering. BTC-e’s founder, Alexander Vinnik, is currently serving prison time for his connection with the exchange. In May, Vinnik’s attorney attempted to get him released as part of a prisoner swap with the Russian Federation. – source: https://cointelegraph.com/
