The issue of cybercrime remains at the forefront of concerns in the decentralized finance (DeFi) landscape, with Moola Market being the latest victim, suffering an exploit amounting to over $8.4 million. However, in an unexpected twist, a significant portion of this money was subsequently returned.
Following the breach, Moola Market took to Twitter, stating, “We take solace in the return of most of the funds, which indeed is a positive outcome for our users and ensures that the fallout is minimized.”
Elaborating on the aftermath of the security breach, the protocol mentioned, “Post the incident, a commendable 93.1% of the compromised funds have been restored to the Moola governance multi-sig. As a precaution, we’ve halted all operations on Moola. We’ll engage with our community regarding further steps and the safest way to resume the Moola protocol’s functions.”
Igor Igamberdiev, the Research Director at The Block, outlined the details of the Moola Market exploit in a tweet. He described the attack as “incredibly simple,” revealing that the malefactor secured funding of 243k CELO from the prominent exchange, Binance, facilitating the heist worth approximately $8.4 million in crypto assets.
Detailing the modus operandi, Igamberdiev tweeted: “The assailant loaned 60k CELO to Moola, then borrowed 1.8M MOO, employing them as collateral.” Subsequently, they manipulated the MOO token’s price, using the leftover CELO to pump its value. This enabled them to utilize it as collateral and extract other tokens in the process.
Earlier this year, Chainalysis, a blockchain research firm, released a report highlighting the uptick in specific crypto-related crimes, notably hacks and fund thefts. The company indicated that the surge in illicit activities, especially those targeting DeFi protocols, can be traced back to a trend that began last year.
As of July 2022, cyberattacks have resulted in the theft of $1.9 billion in cryptocurrency, a significant increase from nearly $1.2 billion stolen by the same time in 2021, as highlighted in Chainalysis’s report.
This growing trend of attacks led the U.S. Federal Bureau of Investigation (FBI) to take action last August. The agency began sending out alerts to investors and platforms regarding potential cybercrime risks in the DeFi sector. The FBI also proposed a series of precautionary measures to help DeFi stakeholders safeguard their assets from potential criminal activities.
The FBI’s statement emphasized, “The rise in cybercrime is in part due to cyber criminals identifying and exploiting weak points in DeFi platform’s smart contracts. These criminals are leveraging the growing popularity of cryptocurrencies among investors and the intricacies associated with the cross-chain operations and open-source structure of DeFi platforms.”