Decentralized finance (DeFi) lending platform Abracadabra Money was the victim of a hack on January 30th, resulting in over $6.5 million worth of crypto assets being stolen.
According to an announcement from Abracadabra, the cyberattack involved the exploitation of “certain cauldrons on Ethereum.” The DeFi protocol’s engineering team is currently investigating the incident.
To lessen the impacts of the recent theft, the Abracadabra decentralized autonomous organization will be buying back and removing from circulation its Magic Internet Money digital tokens. This buyback aims to stabilize the value of Magic Internet Money in response to the stolen funds.
While Abracadabra has been transparent about the hack itself, specifics on the exact amount stolen have not yet been disclosed. However, blockchain intelligence firm Cyvers Alerts has revealed that the attacker made off with $6.5 million after withdrawing over 2,740 Ether from Abracadabra’s platform wallet.
Around $4 million of the stolen funds were then moved to a new Ethereum wallet address. According to security firm Peckshield, the hack was perpetrated using an initial 1 Ether deposit made through the controversial crypto mixer Tornado Cash.
As a non-custodial DeFi lending app, Abracadabra allows users to deposit crypto collateral to take out stablecoin loans in the form of MIM tokens. These can then be used across other decentralized apps to generate yield.
This latest attack points to the growing trend of exploits targeting DeFi protocols. Since 2020, flaws in smart contract code have led to over $3 billion in losses for the sector. While 2023 has seen decreased illicit activity compared to previous years, threats still pose a major risk.
Abracadabra’s transparency around this recent breach stands in contrast to certain past protocol hacks. By being upfront, the lending platform hopes to retain community trust and faith in its ability to recover from this temporary setback.
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