March 27, 2024
SEC Charges SafeMoon
Latest Cryptocurrency News

SafeMoon’s SEC Charges and Exploitation: Resolving the DeFi Project’s Crisis

The decentralized finance project SafeMoon, facing charges by the United States Securities and Exchange Commission (SEC) for security rule violations and fraud, has stated its intention to thoroughly review recent events and resolve the situation promptly.

As communicated by the project on X (formerly Twitter), the teams involved are actively engaged in development and are dedicated to serving users, progressing the project’s vision, and upholding its mission.

SafeMoon experienced an exploitation in March, resulting in a net loss of $8.9 million in BNB. The funds associated with the security breach have been observed moving through centralized exchanges, prompting blockchain analysis company Match Systems to suggest potential significance for law enforcement authorities regarding these transactions. Match Systems’ analysis identified the exploiter’s use of a vulnerability in SafeMoon’s smart contract related to the Bridge Burn feature, enabling the execution of the burn function for SafeMoon (SFM) tokens at any address. The exploiter transferred 32 billion SFM tokens from SafeMoon’s liquidity pool address to SafeMoon’s deployer address, leading to a sudden surge in token value. Leveraging this surge, the exploiter exchanged some SFM tokens for BNB at an inflated rate, resulting in a transfer of 27,380 BNB to the hacker’s address.

The analysis by Match Systems revealed that the smart contract vulnerability wasn’t present in the previous version but was introduced with the new update on March 28, coinciding with the day of the exploit. This has sparked suspicions of potential insider involvement.

Initially, the individual responsible for the attack claimed to have accidentally exploited the protocol and expressed a willingness to establish a method of communication to return 80% of the funds.

Image by freepik

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