Poly Network, a DeFi firm specialising in cryptocurrency transfers, took to Twitter recently to announce that its platform had been hacked, leading to a substantial cryptocurrency loss which had an estimated value of a record $600 million, making it the biggest ever loss to have emerged in the crypto sector, as per a BloombergQuint report.
Notably, this figure, as reported by The Block, a crypto trade publication, supersedes the entire criminal losses registered by the DeFi segment ($474 million) between January and July 2021, according to CipherTrace. Looking at the broader picture, almost 55 percent of all major cryptocurrency scams were DeFi hacks.
The tweet, highlighting the enormity of the hack involved, put out a plea for the stolen Ethereum, BinanceChain, and OxPolygon tokens, asking traders who run cryptocurrency storage wallets to avoid them, since the money belongs to tens of thousands of crypto community members. While it threatened legal action and police involvement, it also offered the said offenders a chance to mutually reach a solution.
The latest reports by the Block said the attackers have already initiated the return process, after their credentials were identified by Slowmist, a blockchain security firm. As of now, they have sent back almost $4.7 million worth of tokens, out of which $ 1 million was in USDC (Polygon blockchain), $1.1 million in BTCB (Binance Smart Chain), $2 million in Shiba Inu tokens, and $6,00,000 FEI stable coin.This incident, however, highlights the vulnerability and unregulated nature associated with the nascent DeFi segment, which offers the potential of completely eliminating middlemen in financial transactions and leverage blockchain to democratise various financial services like insurance, banking, lending, and more. DeFi essentially works on a peer-to-peer basis, with smart software acting as an intermediary. This is perhaps also why DeFi is known to offer a higher yield on crypto-assets as compared to other conventional means. The total value locked in DeFi contracts as of March 2021 reportedly stands at $41 billion.