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DeFi hack analysis: Hackers have outdone themselves in DeFi hacks

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DeFi hack analysis — October 2022 turned out to be the worst month ever for the cryptocurrency community regarding losses incurred in the decentralized finance (DeFi) segment. According to Chainalysis analysts, there has been record high cybercriminal activity since the beginning of October. At the same time, October 31 and Halloween are still a good half of the month away.

Chainalysis experts published a tweet stating that through the first half of October, hacked DeFi attackers stole money worth around $718 million from 11 DeFi protocols.

That total surpassed the previous record high this year, recorded in March. Back then, cybercriminals enriched themselves by $600+ million as a result of the Ronin bridge hack.

“If things continue at this rate, 2022 could surpass the previous year, 2021, and supplant it as the year with the highest hacking activity on record. To date, hackers have launched 125 attacks and stolen over $3 billion.

Chainalysis compares the current hacked DeFi situation to the situation in 2019. According to experts, then, the favorite targets of attackers were centralized exchanges. Now, DeFi protocols and crosschain bridges have taken their place.

Hackers made nearly $600 million from hacking three of those bridges alone this month, which amounted to 82% of all losses in October and 64% of the total losses this year.

As recently as last week, cybercriminals broke into Binance Chain and withdrew through the credit protocols about 2 million BNB coins worth $568 million. Because of the incident, Binance had to temporarily shut down the network.

The new week brought new losses. This time, the victim of the intruders was DeFi-Platform Mango Markets based in Solana. The exploit cost them $100 million. TempleDAO and QANplatform were also among the victims this week, losing $2.34 million and $1 million, respectively.

Earlier, we reported that OKX still provides services in China.

Cryptocurrency

Poloniex rolled back support for stablecoins on Binance Smart Chain (BNB Chain)

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Crypto exchange Poloniex (one of the key investors of which is the creator of the ecosystem TRON Justin Sun) stopped supporting stablecoins on Binance Smart Chain (today – BNB Chain). Poloniex tech support announced this in a tweet.

Tech support later deleted the tweet, but it is still viewable on the websites that linked to it. When trying to open an announcement about the termination of support for Binance Smart Chain stablecoin, the exchange’s website takes you to an authorization form.

According to the saved copy of the announcement, the exchange stopped supporting USDT, USDC, TUSD and BUSD based on the BEP20 protocol back on November 24. However, support for other BNB Chain-based tokens remained in place.

The exchange said that it stops not only deposits but also withdrawals of stablecoins on BEP20, but is ready to convert assets to their counterpart on other networks: Ethereum (ERC20) or TRON (TRC20). It is not clear what exactly caused the change. At the same time, Poloniex representatives on Telegram ignore users’ questions about the reasons for stablecoin support stopping on BEP20, but note that users can still deposit tokens on BEP20.

Earlier, we reported that MakerDAO will exclude renBTC from DAI stablecoin reserves due to the drop in renBTC price.

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Binance Launches Proof-of-Reserves System

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Binance has released a Proof-of-Reserves system based on Merkle Tree, an algorithm for verifying crypto exchange reserves. The Proof-of-Reserves system proves that the company holds user funds in full. When a user deposits one bitcoin, the exchange’s reserves increase by one bitcoin in real time, proving the transparency of balances and the safety of funds.

The first version of Proof-of-Reserves is available for bitcoin (BTC). Similar functionality will soon be available for ETH, USDT, USDC, BUSD and BNB. Binance will also bring in an independent third-party auditor to verify the data.

“Given recent events, it is clear that the community will demand more from crypto exchanges than what is currently required of traditional financial institutions. That’s why we are excited to provide our users with this newest feature to verify crypto exchange reserves,” said Binance CEO Changpeng Zhao.

He added that Binance’s community is larger than that of any other crypto exchange. Therefore, it will take several weeks to get data for most assets.

“We are working to get the next update out as quickly as possible. As much as possible to meet community expectations,” Zhao noted.

Right now, users can check funds in two ways: through the Binance website or by copying the source code into a Python application and cross-referencing.

Also, the ZK-SNARK tool will soon be introduced, providing privacy and simplicity for confirming reserves. The service will help audit users’ balances and confirm that they have assets to cover collateral.

Earlier, we reported that New York City restricted the cryptocurrency mining business.

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Polkadot offers money for fighting crypto fraudsters

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Blockchain project Polkadot has launched Anti-Scam Bounty, an anti-crypto fraudsters program to improve the security of its ecosystem. As part of the new program, Polkadot will pay users cash rewards for helping them fight crypto fraudsters.

Users are required to find fraudulent websites, fake social media profiles and phishing apps that masquerade as Polkadot. They also need to protect Discord servers from hacker attacks. The tasks include creating training materials for users, as well as developing a special Anti-Scam toolbar to protect against fraud in the company’s ecosystem.

“Decentralizing anti-cryptocurrency scammer list efforts and moving them online is no easy task, mainly because most of the anti-scamming happens in Web2,” Polkadot said in a statement.

Each task is overseen by members of the Polkadot community. They will interact with implementers and suggest their own initiatives to better achieve results. Users will receive USD Coin (USDC) awards for helping to fight fraud. The program is now run by three mentors from the Polkadot community and two employees from the Web3 Foundation.

“The threat to Polkadot’s brand development is real, but that’s not our only concern. We don’t want Polkadot to be a free ecosystem. We want it to be a secure ecosystem where users don’t have to constantly worry about getting caught and scammers should think twice before casting their nets,” Polkadot said.

Polkadot concluded by reaching out to scammers, promising that they will have a tough time in the ecosystem.

“So pack your bags and go for it. Or better yet, get a job and stop stealing from people!” the authors of the release concluded.

We previously reported on why the collapse of FTX won’t kill the crypto industry.

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