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Hackers Return Proceeds “Borrowed” from DeFi Hack

  • PolyNetwork hackers return almost half of the stolen cryptocurrency proceeds
  • Change of heart by the hackers may be more of a function of the cryptocurrency ecosystem policing itself rather than any genuine remorse

Whether it was threats from the decentralized finance or DeFi community to “unrecognize” the ill-gotten proceeds of the PolyNetwork hack, or because Tether, Binance and even Ether miners were mulling the prospect of not validating the transactions from the hack, in a bizarre twist, hackers had a change of heart and returned about half of the US$610 million pilfered on Tuesday.

Claiming to have hacked the PolyNetwork for “fun” and that whoever the hacker was could not afford for someone else to have taken advantage of the exploit, the hackers returned some US$260 million worth, according to blockchain forensics firm Elliptic.

The hackers claim to have been acting as vigilantes, hacking the PolyNetwork and exploiting its smart contract vulnerability to “keep it safe” after spotting the bug in the smart contract code.

And while the hackers allege that they will be impossible to trace, Blockchain security research SlowMist claims to have already found the attackers’ email and IP address and device fingerprint.

As cryptocurrencies have gained in popularity, so has a cottage industry of blockchain analysis companies from Singapore-based Merkle Science to the U.S.-headquartered Chainalysis, blossomed to cater to the needs of stakeholders.

Scores of cryptocurrency exchanges and trackers have been on an active hunt for the PolyNetwork hackers, in a display of decentralized vigilantism that could serve as a test for how the digital asset ecosystem polices itself.

The response from the cryptocurrency community has been encouraging, and demonstrates that even if you can steal digital assets, laundering them and cashing them out may prove exceedingly difficult because everyone can see what’s happening on the blockchain.

And it’s likely that the hacker couldn’t really make off with the ill-gotten proceeds of the hack that may have encouraged them to return the funds.

The alleged altruism of the hackers, who claim they had stolen the funds to secure them seems doubtful, especially when, according to Chainalysis, they attempted to launder at least part of the cryptocurrencies by using PolyNetwork to cash in Dai and USDC and converting all of them back to Dai, a stablecoin.

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© Copyright of Novum Global Consultancy Pte Ltd {2020, 2021}. All rights reserved.

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