White Hat Hackers: Why Do Hackers Return Crypto?
The cryptocurrency market is expanding exponentially, but the recent wave of cyber-attacks has shown the industry is struggling on the security front.
One of the largest cryptocurrency thefts ever appears to have been resolved – by the hacker. In 2021, Poly Network, a decentralized finance platform was robbed of more than 600 million in digital assets through a code vulnerability. But a few days later, the company said, every stolen digital assets dime was returned by a hacker – Mr. White Hat.
So, what is a white hat hacker? And why do they hack and return stolen crypto? Let’s find out with Tokenize Xchange!
While black hat hackers are very popular for their cyberattacks with hundreds of millions of dollars in stolen cryptocurrency. A white hat hacker — or ethical hacker — is an individual who uses hacking skills to identify security vulnerabilities in hardware, software, or networks.
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In most cases, white hat hackers are legally allowed to find vulnerabilities in systems or software. After detecting the error, they will notify the system or software owners to fix it before the black hat hacker takes advantage of to attack. In return, they will receive an amount of money as a reward.
The importance of white hat hackers in the crypto ecosystem
Among three popular types of hackers, consisting of white hat, black hat, and gray hat hackers, white hat hackers play a very important role in the crypto world. In general, black hat, gray hat, or white hat hackers are classified based on their ethics.
While black hat Hackers are tech guys with poor ethics and attack for personal gain. In contrast, a black hat hacker will find a way to sell that vulnerability or attack depending on which offers higher value.
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A white hat hacker can be considered a knight. Besides finding system vulnerabilities, they sometimes hunt black hat hackers down to recover stolen assets. Poly Network or Nomad are the best examples. The amount of money returned by white hat hackers was counted as hundreds of millions of dollars in cryptocurrency. In other words, white hat hackers have become an important factor in the crypto sector that is turning into a haven for cyberattacks.
Below are 2 cryptocurrency hacks in which hackers return stolen crypto. Let’s check this out!
Nomad Bridge is a cross-chain protocol that allows users to transfer digital assets between Ethereum, Evmos, Milkomeda, and Moonbeam. An exploit was discovered and allowed multiple opportunists to steal money from the bridge without having any specialized knowledge, despite that vulnerability having been notified before. This later resulted in a significant onslaught. Before the break was fixed, Nomad sustained a loss of nearly 200 million dollars.
To solve the problem, Nomad offers a 10% bounty to recover stolen funds and White Hat Hackers have returned $22 million so far. According to Etherscan statistics, the Nomad recovery fund received the equivalent of $36 million in different tokens on August 5; including ETH, USDC, USDT, DAI, and other altcoins.
Poly Network attack
Poly Network is a cross-chain platform that allows users to transfer digital currencies across a number of blockchains, including BSC, Ethereum, and NEO. Additionally, it aims to provide efficient interoperability in which features and applications may move easily between chains. It makes use of its functional modules for cross-chain connectivity and smart contracts for this purpose.
According to reports, in August 2021, $600 million was stolen from Poly Network. By exploiting a vulnerability in the smart contract, the hackers allegedly took over 600 million dollars worth of Ether and USDC. That makes the attack one of the biggest bitcoin thefts ever. It is even greater than the attack on the cryptocurrency exchange Mt. Gox in 2014.
After that, Poly Network announced they would award half a million dollars to the hackers if they return the stolen assets on Binance Smart Chain (BSC), Ethereum, and Polygon. The hackers then declined the offer and declared they would return the stolen funds to a multi-signature wallet set up by Poly Network. By the end of August, “Mr. White Hat” returned nearly all the stolen crypto to Poly Network.
The role of white hat hackers is undeniable. Various security vulnerabilities and stolen cryptocurrencies are found and returned by white hat hackers, respectively. This maintains a balanced weighbridge in the crypto world. Keep following Tokenize Xchange Blog for more helpful information!
All content produced by Tokenize Exchange is intended solely for educational purposes. This should not be taken as financial or investment advice. Individuals are advised to perform due diligence before purchasing any crypto as they are subject to high volatility.
Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk.