Over $600 million was stolen from Poly Network; Hackers returned almost all the funds

On Aug 10th, a group of hackers stole over $611 million from Poly Network in the biggest cyber attack in DeFi history! Things became strange after hackers returned almost all the assets after a few days. What happened to Poly Network? Let’s find out with Tokenize Blog! 

What is Poly Network?

Poly Network interoperability protocol alliance connecting blockchain networks such as Bitcoin, Ethereum, Neo, Ontology, Elrond, Ziliqa, Binance Smart Chain, Switcheo, and Huobi ECO Chain. 

Those blockchains are independent networks with different systems and methods in the way they validate transactions and store data. Moreover, one chain may have a completely incompatible transaction format with another one. As such, it would be challenging for users to move assets among different blockchains. 

As a result, Poly Network was born to deal with this issue by developing an interoperability layer to connect blockchains together in a decentralized system. One significant application of Poly Network is to transfer digital assets among blockchains. 

So, what happened to Poly Network?

Hackers stole over $600million from Poly Network

On Aug10th, hackers stole over $611 million from Poly Network in the biggest cyber attack in DeFi history. To avoid mistakes, be noted that Poly Network was hacked, not MATIC (Polygon). 

The hackers attacked Poly Network on 3 DeFi exchange Polygon, Ethereum, and Binance Smart Chain and stole $266 million in tokens in Ethereum, $253 million in tokens on Binance Smart Chain, and $85 million in USDC on Polygon Network. The total asset stolen at the time of announcement was over $600. 

After the attack, Poly Network asked cryptocurrency exchanges and miners to block all tokens coming from those above addresses. Also, the developer team announced to take legal action against hackers and requested them to return stolen assets.  

As a result, Tether froze over $30 million according to Tether Chief Technology Officer Paul Adroino. 

The impact of the attack on the cryptocurrency market

Regardless of the serious crypto attack, the market was not outstandingly affected. BTC price reduced by 1.9% while ETH was down by 1.57% at the time of announcement. 

Said Michael Tant, the business analyst at Inside: “Surprisingly, the market has not been affected much, despite $600 million being exploited, which is pretty significant. I think that is telling of the market that we are in. DeFi has survived so many individual hacks and exploits that people are less scared of their assets going to zero as a result.” 

According to CipherTrace, from the beginning of 2021 till this July, the DeFi-related systems have been hacked for a total of $361 million, nearly threefold compared to the number of 2020. 

Also, DeFi-related frauds have occurred more commonly with 54% of total crypto fraud volume compared to 3% of last year. As such, DeFi has become a new target for cyber attacks. 

Latest updates on the hack 

Surprisingly, after a few hours, the hackers returned $258 million of stolen assets to Poly Network, the rest of the funds is yet to be returned, though. 

Poly Network said Thursday that all of the funds except $33 million worth of USDT have been transferred back.

Hence, it was suggested that they are white hat hackers who were trying to find security flaws to warn Poly Network developers. They even have conducted an AMA (Ask Me Anything) by Ethereum transaction’s embedded messages. When asked why they hacked the Poly Network, their answer was “for fun” and “cross-chain hacking is hot”. 

However, according to Robinson, the chief scientist at blockchain analytics firm Elliptic, “even if you can steal crypto-assets, laundering them and cashing out is extremely difficult due to the transparency of the blockchain.”

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