May 23, 2024
Sonne Finance Hit by $20M Hack
Latest Cryptocurrency News

Sonne Finance Hit by $20M Hack

Lending protocol Sonne Finance was forced to halt its operations after a hack drained $20 million worth of cryptocurrencies from the market. On May 14, around 10:30 pm UTC, Web3 security firm Cyvers detected an ongoing attack on Sonne Finance’s USD Coin (USDC) and Wrapped Ether (WETH) contracts. By the time Sonne Finance became aware of the situation 25 minutes later, the hacker had already stolen $20 million in WETH, Velo (VELO), soVELO, and Wrapped USDC (USDC.e).

Source: Sonne Finance

Immediate Response and Investigation

On May 15 at 12:11 am UTC, Sonne Finance announced on X that “All markets on Optimism have been paused.” Shortly after this announcement, the protocol partnered with Cyvers to investigate the breach further. Sonne Finance is currently exploring all options to retrieve the stolen funds, including negotiating a bug bounty with the hacker. In such arrangements, the hacker returns most of the stolen funds and keeps roughly 10% as a reward for identifying the security flaw.

Source: PeckShield

However, the hacker seems uninterested in negotiations. According to blockchain investigator PeckShield, the exploiter has already moved a significant portion of the loot ($7.8 million) to a new wallet address. The hacker then swapped 59 WBTC for approximately 1,185 Ether (ETH) and 183,000 Dai (DAI), suggesting an intent to launder the stolen funds through a privacy protocol like Tornado Cash to avoid traceability.

Analysis and Additional Incidents

Sonne Finance’s post-mortem revealed that the attack was a donation attack on Sonne’s Compound v2 forks, which contained a known bug, according to X community member PoorBabyCorn. They criticized Sonne Finance for using Compound v2 despite being aware of the risks, questioning, “If this isn’t a premeditated backdoor, what is?” In parallel, another significant exploit occurred involving BlockTower Capital, a major hedge fund of the crypto institutional investment firm.

The fund was reportedly exploited and partially drained. The stolen funds have not been recovered, and BlockTower has enlisted blockchain forensic analysts to trace the funds and determine how the breach occurred. The exploiter has not been apprehended, as Bloomberg reported on May 15, citing sources familiar with the matter. Partners of BlockTower have been informed about the incident. The firm reportedly manages $1.7 billion in assets. BlockTower did not immediately respond to requests for comment.

In February 2023, BlockTower was also affected by a $2 million exploit of the multichain exchange aggregator Dexible, losing around $1.5 million. Dexible noted that about 85% of the stolen funds were from a “few big whales.” On-chain intelligence platform Arkham Intelligence identified a wallet drained of $1.5 million as belonging to BlockTower.

Image by standret on Freepik

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