Defrost Finance was hacked & the exploit may have been a rug pull that made off with $12 million

Protocol for decentralized finance Although blockchain security company Peckshield claimed, citing “community information,” Defrost Finance was hacked on December 23, it may have been a scam to steal $12 million.

Defrost Finance Hacked in Attack Some Say May Have Been a Rug Pull

The Defrost team claimed in a tweet thread published on December 25 that a first attack used a flash loan to siphon money from its V2 product. The owner key exploited V1 in a second, more significant attack. The leveraged trade protocol on the Avalanche blockchain didn’t specify how much money had been taken.

According to Peckshield’s study, the assault used a bogus collateral token and manipulated price.

A rug pull can happen if developers set up a liquidity pool and then take the money out after investors have purchased the associated token. According to Defi Llama data, the total amount of money held on Defrost Finance, which peaked at $95 million in February, has recently been around $13 million.

On December 25th, that fell to less than $93,000. If a rug pull is an attack, that would be unique. Usually, the group responsible for the scheme disappears and cannot be reached. However, Defrost Finance stated in a tweet that it is open to bargaining with the attack’s perpetrators to return the monies.

A Twitter attempt to contact the company was unsuccessful due to the account’s disabling of direct messages. DeFiYield claimed to have audited Defrost Finance a year prior and identified the smart contract flaw that was exploited in the breach.

According to Chainalysis, crypto investors lost over $2.8 billion to rug pullers last year. 37% of the more than $7.7 billion in criminal profits generated by cryptocurrency schemes that year came from rug pulls. The number in 2022 is probably higher: According to research from the blockchain risk monitoring company Solidus Labs, scammers have used over 117,000 scam tokens as of December 1—41% more than they did in all of 2021.

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