PolyNetwork Attacker Issues “Worthless” Billions in SHIB, BNB, BUSD in Latest Crypto Hack

The recent incident involving malicious token issuances on PolyNetwork has raised concerns within the cryptocurrency community. It is estimated that these tokens have a value of around $4 billion. However, it is unlikely that the attackers will be able to make significant profits from their actions due to several factors.

One key factor is the issue of liquidity. Liquidity refers to the ease of buying or selling an asset on the market. In this case, the malicious tokens may have limited liquidity, which means it would be challenging for the attackers to sell them in large quantities without significantly affecting the market price. Selling a large number of tokens at once could cause a price drop, making it difficult for the attackers to cash out their holdings without attracting attention.

Additionally, security precautions and measures have been taken by PolyNetwork and other involved platforms to mitigate the impact of the attack. These actions include freezing the assets associated with the attack and collaborating with various entities to track and recover the stolen funds. By implementing these security measures, the affected platforms aim to minimize financial losses and prevent attackers from profiting.

It's important to note that the situation is still evolving, and the outcome regarding the recovery of the funds is uncertain. However, the low liquidity of the malicious tokens and the proactive security measures taken by the platforms involved may hinder the attackers' ability to make substantial profits from their illicit activities.

This incident serves as a reminder of the ongoing security challenges in the cryptocurrency space. It highlights the need for robust security protocols and constant vigilance to protect users' funds and prevent such attacks in the future.

The Poly network was the latest crypto hack (Kevin ku/Unsplash)

 

The attack on PolyNetwork resulted in the issuance of billions of dollars worth of tokens that did not have actual value due to the manipulation of the bridge tool. The bridge tool is a smart contract-based mechanism that enables the transfer of tokens between different blockchains. By exploiting a vulnerability in the bridge's functionality, the attackers were able to trick the system into generating and distributing tokens on one network that had no corresponding value on the intended network.

This type of attack requires a deep understanding of smart contract technology and the ability to exploit vulnerabilities in the system. The attackers found a way to manipulate the bridge tool to their advantage, allowing them to create and distribute a significant amount of tokens with little to no value.

The incident highlights the importance of robust security measures and thorough auditing of smart contracts and blockchain protocols. It also underscores the ongoing need for proactive monitoring and identification of vulnerabilities to prevent such attacks.

Following the attack, PolyNetwork and other affected parties have been working diligently to mitigate the impact. Efforts have been made to freeze the stolen funds and collaborate with blockchain communities, security firms, and law enforcement agencies to investigate the incident and identify the perpetrators.

Although the attack has caused significant disruption and financial loss, the low liquidity and security precautions associated with the maliciously issued tokens mean that the attackers are unlikely to benefit substantially from their actions.

The incident serves as a reminder of the evolving nature of cybersecurity threats in the blockchain space. It emphasizes the importance of continuous improvement in security practices, as well as the need for cooperation among industry stakeholders to address vulnerabilities and protect users from such attacks in the future.

After the attack on PolyNetwork, the attackers managed to mint a substantial number of tokens on different blockchains, including 24 billion Binance USD (BUSD) and BNB on the Metis blockchain, 999 trillion Shiba Inu (SHIB) on the Heco blockchain, and millions of other tokens on networks like Avalanche and Polygon. As a result, the attackers' wallet showed a staggering value of over $42 billion worth of tokens immediately after the attack.

However, despite the apparent value of the tokens, the attackers faced significant challenges in monetizing their ill-gotten gains. The lack of liquidity posed a major obstacle for the attackers. Developers confirmed that there was no available "sell liquidity" for the BNB and BUSD tokens on the Metis blockchain. Additionally, the METIS tokens issued through the attack were locked on the PolyNetwork bridge by the developers, preventing the attackers from freely accessing or trading them.

The lack of liquidity and the precautionary measures taken by developers, such as locking the METIS tokens, significantly limited the attackers' ability to convert the tokens into real-world assets or profit from their actions. This helps mitigate the potential financial impact of the attack, as the tokens hold little value beyond their speculative worth.

Nonetheless, the incident highlights the importance of robust security measures, continuous monitoring, and prompt response in the blockchain ecosystem. It also serves as a reminder for blockchain developers and users to remain vigilant against potential vulnerabilities and to implement strong security practices to safeguard against such attacks in the future.

Despite the limited liquidity for some of the illicitly-minted tokens, it appears that the attacker was able to find liquidity for certain tokens. According to analytics firm Lookonchain, the attacker managed to exchange 94 billion SHIB tokens for 360 ether (ETH), 495 million COOK tokens for 16 ether, and 15 million RFuel tokens for 27 ether. These transactions suggest that the attacker was successful in converting some of the tokens into a more liquid cryptocurrency like ether.

Lookonchain also observed that the attacker was transferring assets and ether to new wallets, which indicates a potential intention to sell those assets. This activity suggests that the attacker may have been seeking opportunities to cash out and convert the tokens into a more widely accepted and tradable cryptocurrency like ether.

It is important to note that the overall impact of the attack and the attacker's ability to monetize the stolen tokens may vary depending on the liquidity and market conditions of different tokens and blockchains involved. The specific details and outcomes of these transactions will likely continue to be monitored by relevant authorities and blockchain analytics firms to track any further movement or attempts to convert the tokens into real value.

The attack on PolyNetwork that occurred on Sunday was the second time the protocol had been targeted by hackers. Back in August 2021, the platform was exploited in a hack that resulted in the theft of $600 million, which was a record-breaking amount at that time. The breach was attributed to a leaked private key that was utilized to sign a cross-chain message, allowing the attackers to exploit the vulnerability.

Bridges, which are essential for facilitating the transfer of tokens between different blockchain networks, have become a crucial but vulnerable component of the cryptocurrency ecosystem. While they enable the movement of substantial amounts of value, they have also been a primary target for attacks and hacks throughout the industry's history.

The appeal of bridges to attackers lies in the significant value involved in cross-chain transfers. By identifying and exploiting weaknesses in these bridges, hackers can potentially gain access to large sums of money. As a result, it is imperative for developers and security experts to continuously enhance the security measures surrounding bridges and conduct comprehensive audits to identify and address any potential vulnerabilities.

Given the growing importance of cross-chain interoperability in the cryptocurrency space, it is crucial to prioritize the development of robust security protocols for bridges. By doing so, we can help mitigate the risks associated with these attacks and ensure the protection of users and their assets within the crypto ecosystem.