‘White hat’ hacker behind $610m crypto heist returns most of money

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The Guardian 12 August, 2021 - 09:14pm 107 views

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Suspected hacker behind $600 million Poly Network crypto heist did it 'for fun'

CNBC 13 August, 2021 - 01:10am

A person claiming to be the hacker behind one of the biggest cryptocurrency heists of all time says the theft was done "for fun."

More than $600 million worth of crypto was stolen in the cyberattack, which targeted a decentralized finance platform called Poly Network.

Decentralized finance is a fast-growing space within the crypto industry that aims to reproduce traditional financial products like loans and trading without the involvement of any middlemen.

While it has attracted billions of dollars in investment, the DeFi space has also given rise to new hacks and scams. For example, a token backed by billionaire investor Mark Cuban recently dropped from $60 to several thousandths of a cent in an apparent "bank run."

Poly Network is a platform that looks to connect different blockchains so they can work together. A blockchain is a digital ledger of transactions that's maintained by a distributed network of computers, rather than a central authority.

On Tuesday, a hacker exploited a flaw in Poly Network's code to steal the funds. According to researchers at blockchain security firm SlowMist, Poly Network lost more than $610 million in the attack.

Poly Network then pleaded with the hacker to return the money and, sure enough, nearly half of the crypto haul was returned by Wednesday. As of Thursday morning, $342 million worth of assets had been returned, according to Poly Network.

In a Q&A embedded within a digital currency transaction Wednesday, a person claiming to be the anonymous hacker explained the reasoning behind the hack — "for fun."

"When spotting the bug, I had a mixed feeling," the person said. "Ask yourself what to do had you facing so much fortune. Asking the project team politely so that they can fix it? Anyone could be the traitor given one billion!"

"I can trust nobody!" the person continued. "The only solution I can come up with is saving it in a _trusted_ account while keeping myself _anonymous_ and _safe_."

The person also gave a reason for returning the funds, claiming: "That's always the plan! I am _not_ very interested in money! I know it hurts when people are attacked, but shouldn't they learn something from those hacks?"

Tom Robinson, chief scientist at blockchain analytics firm Elliptic, said the person writing the Q&A was "definitely" the hacker behind the Poly Network attack.

"The messages are embedded in transactions sent from the hacker's account," Robinson told CNBC. "Only the holder of the stolen assets could have sent them."

CNBC could not independently verify the authenticity of the message, and the hacker, or hackers, have not been identified. SlowMist said its researchers had tracked down information on the attacker's IP and email information. In the Q&A, the hacker claimed to have taken care to ensure being "untracable."

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Crypto heist hacker returns most of the stolen funds

BBC News 12 August, 2021 - 05:10pm

On Thursday, Poly Network confirmed on Twitter that $268m worth of Ether tokens had now been recovered.

Over the last 24 hours, the hacker has returned $342m worth of tokens relating to three crypto-currencies to the firm.

The individual also posted several pages of notes to the blockchain, disclosing why they hacked the firm and the offers Poly Network made to them.

In a twist that's worrying some cyber-security experts, the hacker claims the firm offered to pay $500,000 if they returned the stolen assets, as well as a promise of immunity from prosecution.

However, the hacker says he did not accept the offer.

By Thursday evening, Poly Network posted an update that most of the remaining assets in the hacker's possession had been transferred to a digital wallet controlled by both the hacker and the company.

But some of the money is still outstanding.

"The hacker still holds $33.4m of stolen Tether [tokens] - because it has been frozen by Tether themselves," Tom Robinson, co-founder of Elliptic, a London-based blockchain analytics and compliance firm, told the BBC.

He added that it could be seen on the blockchain that "a few thousand dollars' worth of various other tokens" were being held onto by the hacker.

It was not clear, however, if these were part of the stolen assets, or donations that the hacker requested people to send them on Thursday, to compensate any users who might have lost money due to the hack.

Other money outstanding also includes a 13.37 Ether tip ($40,000), which the hacker sent to a user who warned them that the Tether tokens had been frozen by its developer.

The Poly Network hack occurred on Tuesday, when blockchain site Poly Network said hackers had exploited a vulnerability in its system and taken thousands of digital tokens such as Ether.

In a letter posted on Twitter, it urged the thieves to "establish communication and return the hacked assets".

The anonymous hacker claimed he or she carried out the heist for fun and to encourage cryptocurrency exchange firm Poly Networks to improve its security.

Poly Network said on Twitter it was still waiting for the repayment process to be completed, but that it is working with the hacker, whom the firm named "Mr White Hat".

White hat hackers are ethical security researchers who use their skills for good to help organisations find security flaws.

Poly Network has referred to the hacker in this way in multiple public posts. The hacker alleges that they were sent a message from the firm over the blockchain, saying: "Since we believe that your action is white hat behaviour, we plan to offer you a $500,000" reward.

They claim the firm added: "We assure you that you will not be accountable for this incident."

The alleged move has angered some in the security world who are worried that it might set a precedent for criminal hackers to white-wash their actions.

Katie Paxton-Fear, a white hat hacker and lecturer at Manchester Metropolitan University, says that "labelling this hack as white hat is just really disappointing".

Mrs Paxton-Fear has found over 30 vulnerabilities in organisations ranging from the US Department of Defense (DoD) to Verizon Media.

"White hat hacking is all about having a scope, not touching some systems, working with the team, writing professional reports detailing our findings, not going further than we have to to demonstrate risk," she said.

"Our approach is 'first, do no harm', potentially verifying fixes are put in place and not putting any users data at risk."

Charlie Steele, Partner at Forensic Risk Alliance and former Department of Justice and FBI official is also concerned about the alleged offer from Poly Network.

"Private companies have no authority to promise immunity from criminal prosecution," he told the BBC.

"In this event where a hacker stole the $600m 'for fun' and then returned most of it, all while remaining anonymous, is not likely to lessen regulators' concerns about the variety of risks posed by crypto-currencies."

The fall of Afghanistan’s second largest city is a crushing blow for the government.

15 sayings from around the world

Crypto heist hacker returns most of the stolen funds

Reuters 12 August, 2021 - 05:10pm

On Thursday, Poly Network confirmed on Twitter that $268m worth of Ether tokens had now been recovered.

Over the last 24 hours, the hacker has returned $342m worth of tokens relating to three crypto-currencies to the firm.

The individual also posted several pages of notes to the blockchain, disclosing why they hacked the firm and the offers Poly Network made to them.

In a twist that's worrying some cyber-security experts, the hacker claims the firm offered to pay $500,000 if they returned the stolen assets, as well as a promise of immunity from prosecution.

However, the hacker says he did not accept the offer.

By Thursday evening, Poly Network posted an update that most of the remaining assets in the hacker's possession had been transferred to a digital wallet controlled by both the hacker and the company.

But some of the money is still outstanding.

"The hacker still holds $33.4m of stolen Tether [tokens] - because it has been frozen by Tether themselves," Tom Robinson, co-founder of Elliptic, a London-based blockchain analytics and compliance firm, told the BBC.

He added that it could be seen on the blockchain that "a few thousand dollars' worth of various other tokens" were being held onto by the hacker.

It was not clear, however, if these were part of the stolen assets, or donations that the hacker requested people to send them on Thursday, to compensate any users who might have lost money due to the hack.

Other money outstanding also includes a 13.37 Ether tip ($40,000), which the hacker sent to a user who warned them that the Tether tokens had been frozen by its developer.

The Poly Network hack occurred on Tuesday, when blockchain site Poly Network said hackers had exploited a vulnerability in its system and taken thousands of digital tokens such as Ether.

In a letter posted on Twitter, it urged the thieves to "establish communication and return the hacked assets".

The anonymous hacker claimed he or she carried out the heist for fun and to encourage cryptocurrency exchange firm Poly Networks to improve its security.

Poly Network said on Twitter it was still waiting for the repayment process to be completed, but that it is working with the hacker, whom the firm named "Mr White Hat".

White hat hackers are ethical security researchers who use their skills for good to help organisations find security flaws.

Poly Network has referred to the hacker in this way in multiple public posts. The hacker alleges that they were sent a message from the firm over the blockchain, saying: "Since we believe that your action is white hat behaviour, we plan to offer you a $500,000" reward.

They claim the firm added: "We assure you that you will not be accountable for this incident."

The alleged move has angered some in the security world who are worried that it might set a precedent for criminal hackers to white-wash their actions.

Katie Paxton-Fear, a white hat hacker and lecturer at Manchester Metropolitan University, says that "labelling this hack as white hat is just really disappointing".

Mrs Paxton-Fear has found over 30 vulnerabilities in organisations ranging from the US Department of Defense (DoD) to Verizon Media.

"White hat hacking is all about having a scope, not touching some systems, working with the team, writing professional reports detailing our findings, not going further than we have to to demonstrate risk," she said.

"Our approach is 'first, do no harm', potentially verifying fixes are put in place and not putting any users data at risk."

Charlie Steele, Partner at Forensic Risk Alliance and former Department of Justice and FBI official is also concerned about the alleged offer from Poly Network.

"Private companies have no authority to promise immunity from criminal prosecution," he told the BBC.

"In this event where a hacker stole the $600m 'for fun' and then returned most of it, all while remaining anonymous, is not likely to lessen regulators' concerns about the variety of risks posed by crypto-currencies."

The fall of Afghanistan’s second largest city is a crushing blow for the government.

15 sayings from around the world

Crypto heist hacker returns most of the stolen funds

Deseret News 12 August, 2021 - 05:10pm

On Thursday, Poly Network confirmed on Twitter that $268m worth of Ether tokens had now been recovered.

Over the last 24 hours, the hacker has returned $342m worth of tokens relating to three crypto-currencies to the firm.

The individual also posted several pages of notes to the blockchain, disclosing why they hacked the firm and the offers Poly Network made to them.

In a twist that's worrying some cyber-security experts, the hacker claims the firm offered to pay $500,000 if they returned the stolen assets, as well as a promise of immunity from prosecution.

However, the hacker says he did not accept the offer.

By Thursday evening, Poly Network posted an update that most of the remaining assets in the hacker's possession had been transferred to a digital wallet controlled by both the hacker and the company.

But some of the money is still outstanding.

"The hacker still holds $33.4m of stolen Tether [tokens] - because it has been frozen by Tether themselves," Tom Robinson, co-founder of Elliptic, a London-based blockchain analytics and compliance firm, told the BBC.

He added that it could be seen on the blockchain that "a few thousand dollars' worth of various other tokens" were being held onto by the hacker.

It was not clear, however, if these were part of the stolen assets, or donations that the hacker requested people to send them on Thursday, to compensate any users who might have lost money due to the hack.

Other money outstanding also includes a 13.37 Ether tip ($40,000), which the hacker sent to a user who warned them that the Tether tokens had been frozen by its developer.

The Poly Network hack occurred on Tuesday, when blockchain site Poly Network said hackers had exploited a vulnerability in its system and taken thousands of digital tokens such as Ether.

In a letter posted on Twitter, it urged the thieves to "establish communication and return the hacked assets".

The anonymous hacker claimed he or she carried out the heist for fun and to encourage cryptocurrency exchange firm Poly Networks to improve its security.

Poly Network said on Twitter it was still waiting for the repayment process to be completed, but that it is working with the hacker, whom the firm named "Mr White Hat".

White hat hackers are ethical security researchers who use their skills for good to help organisations find security flaws.

Poly Network has referred to the hacker in this way in multiple public posts. The hacker alleges that they were sent a message from the firm over the blockchain, saying: "Since we believe that your action is white hat behaviour, we plan to offer you a $500,000" reward.

They claim the firm added: "We assure you that you will not be accountable for this incident."

The alleged move has angered some in the security world who are worried that it might set a precedent for criminal hackers to white-wash their actions.

Katie Paxton-Fear, a white hat hacker and lecturer at Manchester Metropolitan University, says that "labelling this hack as white hat is just really disappointing".

Mrs Paxton-Fear has found over 30 vulnerabilities in organisations ranging from the US Department of Defense (DoD) to Verizon Media.

"White hat hacking is all about having a scope, not touching some systems, working with the team, writing professional reports detailing our findings, not going further than we have to to demonstrate risk," she said.

"Our approach is 'first, do no harm', potentially verifying fixes are put in place and not putting any users data at risk."

Charlie Steele, Partner at Forensic Risk Alliance and former Department of Justice and FBI official is also concerned about the alleged offer from Poly Network.

"Private companies have no authority to promise immunity from criminal prosecution," he told the BBC.

"In this event where a hacker stole the $600m 'for fun' and then returned most of it, all while remaining anonymous, is not likely to lessen regulators' concerns about the variety of risks posed by crypto-currencies."

The fall of Afghanistan’s second largest city is a crushing blow for the government.

15 sayings from around the world

DeFi Needs Hackers to Become Unhackable | Daniel Kuhn - CoinDesk

CoinDesk 12 August, 2021 - 12:07pm

If computers will continue to do more important things, we'll require those programs to be secure. Learning what not to do is one way there.

They identified a bug – or rather, a part of the code that enabled them to transfer money to themselves – and acted on it. The developers didn’t intend to put in a “free money” button, but it was there ready to be exploited. And praise be it was: It’s one more mistake that (hopefully) won’t be repeated.

This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here. 

“I am not very interested in money! I know it hurts when people are attacked, but shouldn’t they learn something from those attacks?” the exploiter posted Wednesday in Ethereum blockchain data. At press time, approximately half of the stolen funds have been returned.

It’s not really my place to say whether they’re genuinely a “white hat” hacker or a black hat that realized it would be impossible to cash out. For what it’s worth, Tor Ekeland, an attorney who built a career out of defending computer miscreants, said: “Hacking is often more about the thrill of the hack than any object obtained in the hack.” 

Hacks and exploits are not uncommon in the growing, multi-billion dollar decentralized finance (DeFi) ecosystem, of which Poly Network was a part. Often the result of hastily designed scripts or deeper flaws in at the protocol level, attacks are also an important part of how any computer network grows more secure. That’s doubly true in the world of blockchain. 

In fact, some would say hacks lead to unhackable code. It’s a controversial point, especially because hackers don’t always return the stolen funds, and undoubtedly people are harmed in the process.

“In the world of blockchain, when somebody deploys a smart contract – like on Ethereum – that has a vulnerability, hundreds of millions of dollars disappear overnight and there’s no recourse,” legendary former Google computer scientist and founder of Agoric, Mark Miller, said at a Foresight Institute conference in 2018. “There are these huge bug bounties, effectively. And when one of these things gets collected, the software with these vulnerabilities dies.” In other words, blockchain-based systems face evolutionary pressure. Weak projects face “an early death” so the entire system becomes populated by secure code.

Blockchain technology has only been around for a little over a decade. DeFi, as we know it, is even younger. There’s a case to be made we’re just at the beginning stages of adoption, with many more mistakes likely along the way. 

Hacks aren’t the only way for projects or protocols to evolve. People can build simple things slowly, as in the case of Bitcoin, which has only ever been down twice over its 12-year lifespan. There are external audits and a potential role for policy-makers or government regulators to play.

But searching for flaws in a codebase or finding exploiters after the fact is like “hunting the wolves,” Zooko Wilcox-O’Hearn, computer security specialist and brainchild behind Zcash, said in a direct message, borrowing a line from Vitalik Buterin. 

He should know. In 2015, his auditing company, Least Authority, was hired by a group of devs to do a security audit of the soon-to-be-launched Ethereum network. Many of the vulnerabilities they found were fixed, but not the one having to do with “reentrancy,” which enabled people to deploy smart contracts that could be exploited.

Just years later that same vulnerability was exploited in “The DAO hack,” a $55 million headache that led to the contentious fork between Ethereum and Ethereum Classic. At the time it filed its report, Least Authority even provided a hypothetical example of a smart contract that could be exploited: a crowd-funding smart contract, like The DAO. 

As more money piles into smart contracts, it’s going to become harder and harder to “hunt the wolves” or individual exploiters. With hacks entire communities learn together what should and should not be repeated. Over time this leads to more “reliable” code. It’s one way to “armor the sheep.”

“If we as humans are going to rely on computers to do important things for us — and we are! — then we really require those programs to be unhackable. And despite the cynicism and despair among my fellow security experts, it is actually achievable!” Wilcox said.

“For every program like The DAO and Poly that got exploited because it had a vulnerability, you can point to another program that did the same thing but did not have that vulnerability. So progress is possible!”

UPDATE (Aug. 12, 2021, 18:35 UTC): Corrects Agoric’s name. We regret the error.

DeFi Needs Hackers to Become Unhackable | Daniel Kuhn - CoinDesk

PC Gamer 12 August, 2021 - 12:07pm

If computers will continue to do more important things, we'll require those programs to be secure. Learning what not to do is one way there.

They identified a bug – or rather, a part of the code that enabled them to transfer money to themselves – and acted on it. The developers didn’t intend to put in a “free money” button, but it was there ready to be exploited. And praise be it was: It’s one more mistake that (hopefully) won’t be repeated.

This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here. 

“I am not very interested in money! I know it hurts when people are attacked, but shouldn’t they learn something from those attacks?” the exploiter posted Wednesday in Ethereum blockchain data. At press time, approximately half of the stolen funds have been returned.

It’s not really my place to say whether they’re genuinely a “white hat” hacker or a black hat that realized it would be impossible to cash out. For what it’s worth, Tor Ekeland, an attorney who built a career out of defending computer miscreants, said: “Hacking is often more about the thrill of the hack than any object obtained in the hack.” 

Hacks and exploits are not uncommon in the growing, multi-billion dollar decentralized finance (DeFi) ecosystem, of which Poly Network was a part. Often the result of hastily designed scripts or deeper flaws in at the protocol level, attacks are also an important part of how any computer network grows more secure. That’s doubly true in the world of blockchain. 

In fact, some would say hacks lead to unhackable code. It’s a controversial point, especially because hackers don’t always return the stolen funds, and undoubtedly people are harmed in the process.

“In the world of blockchain, when somebody deploys a smart contract – like on Ethereum – that has a vulnerability, hundreds of millions of dollars disappear overnight and there’s no recourse,” legendary former Google computer scientist and founder of Agoric, Mark Miller, said at a Foresight Institute conference in 2018. “There are these huge bug bounties, effectively. And when one of these things gets collected, the software with these vulnerabilities dies.” In other words, blockchain-based systems face evolutionary pressure. Weak projects face “an early death” so the entire system becomes populated by secure code.

Blockchain technology has only been around for a little over a decade. DeFi, as we know it, is even younger. There’s a case to be made we’re just at the beginning stages of adoption, with many more mistakes likely along the way. 

Hacks aren’t the only way for projects or protocols to evolve. People can build simple things slowly, as in the case of Bitcoin, which has only ever been down twice over its 12-year lifespan. There are external audits and a potential role for policy-makers or government regulators to play.

But searching for flaws in a codebase or finding exploiters after the fact is like “hunting the wolves,” Zooko Wilcox-O’Hearn, computer security specialist and brainchild behind Zcash, said in a direct message, borrowing a line from Vitalik Buterin. 

He should know. In 2015, his auditing company, Least Authority, was hired by a group of devs to do a security audit of the soon-to-be-launched Ethereum network. Many of the vulnerabilities they found were fixed, but not the one having to do with “reentrancy,” which enabled people to deploy smart contracts that could be exploited.

Just years later that same vulnerability was exploited in “The DAO hack,” a $55 million headache that led to the contentious fork between Ethereum and Ethereum Classic. At the time it filed its report, Least Authority even provided a hypothetical example of a smart contract that could be exploited: a crowd-funding smart contract, like The DAO. 

As more money piles into smart contracts, it’s going to become harder and harder to “hunt the wolves” or individual exploiters. With hacks entire communities learn together what should and should not be repeated. Over time this leads to more “reliable” code. It’s one way to “armor the sheep.”

“If we as humans are going to rely on computers to do important things for us — and we are! — then we really require those programs to be unhackable. And despite the cynicism and despair among my fellow security experts, it is actually achievable!” Wilcox said.

“For every program like The DAO and Poly that got exploited because it had a vulnerability, you can point to another program that did the same thing but did not have that vulnerability. So progress is possible!”

UPDATE (Aug. 12, 2021, 18:35 UTC): Corrects Agoric’s name. We regret the error.

DeFi Needs Hackers to Become Unhackable | Daniel Kuhn - CoinDesk

Cryptonews 12 August, 2021 - 12:07pm

If computers will continue to do more important things, we'll require those programs to be secure. Learning what not to do is one way there.

They identified a bug – or rather, a part of the code that enabled them to transfer money to themselves – and acted on it. The developers didn’t intend to put in a “free money” button, but it was there ready to be exploited. And praise be it was: It’s one more mistake that (hopefully) won’t be repeated.

This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here. 

“I am not very interested in money! I know it hurts when people are attacked, but shouldn’t they learn something from those attacks?” the exploiter posted Wednesday in Ethereum blockchain data. At press time, approximately half of the stolen funds have been returned.

It’s not really my place to say whether they’re genuinely a “white hat” hacker or a black hat that realized it would be impossible to cash out. For what it’s worth, Tor Ekeland, an attorney who built a career out of defending computer miscreants, said: “Hacking is often more about the thrill of the hack than any object obtained in the hack.” 

Hacks and exploits are not uncommon in the growing, multi-billion dollar decentralized finance (DeFi) ecosystem, of which Poly Network was a part. Often the result of hastily designed scripts or deeper flaws in at the protocol level, attacks are also an important part of how any computer network grows more secure. That’s doubly true in the world of blockchain. 

In fact, some would say hacks lead to unhackable code. It’s a controversial point, especially because hackers don’t always return the stolen funds, and undoubtedly people are harmed in the process.

“In the world of blockchain, when somebody deploys a smart contract – like on Ethereum – that has a vulnerability, hundreds of millions of dollars disappear overnight and there’s no recourse,” legendary former Google computer scientist and founder of Agoric, Mark Miller, said at a Foresight Institute conference in 2018. “There are these huge bug bounties, effectively. And when one of these things gets collected, the software with these vulnerabilities dies.” In other words, blockchain-based systems face evolutionary pressure. Weak projects face “an early death” so the entire system becomes populated by secure code.

Blockchain technology has only been around for a little over a decade. DeFi, as we know it, is even younger. There’s a case to be made we’re just at the beginning stages of adoption, with many more mistakes likely along the way. 

Hacks aren’t the only way for projects or protocols to evolve. People can build simple things slowly, as in the case of Bitcoin, which has only ever been down twice over its 12-year lifespan. There are external audits and a potential role for policy-makers or government regulators to play.

But searching for flaws in a codebase or finding exploiters after the fact is like “hunting the wolves,” Zooko Wilcox-O’Hearn, computer security specialist and brainchild behind Zcash, said in a direct message, borrowing a line from Vitalik Buterin. 

He should know. In 2015, his auditing company, Least Authority, was hired by a group of devs to do a security audit of the soon-to-be-launched Ethereum network. Many of the vulnerabilities they found were fixed, but not the one having to do with “reentrancy,” which enabled people to deploy smart contracts that could be exploited.

Just years later that same vulnerability was exploited in “The DAO hack,” a $55 million headache that led to the contentious fork between Ethereum and Ethereum Classic. At the time it filed its report, Least Authority even provided a hypothetical example of a smart contract that could be exploited: a crowd-funding smart contract, like The DAO. 

As more money piles into smart contracts, it’s going to become harder and harder to “hunt the wolves” or individual exploiters. With hacks entire communities learn together what should and should not be repeated. Over time this leads to more “reliable” code. It’s one way to “armor the sheep.”

“If we as humans are going to rely on computers to do important things for us — and we are! — then we really require those programs to be unhackable. And despite the cynicism and despair among my fellow security experts, it is actually achievable!” Wilcox said.

“For every program like The DAO and Poly that got exploited because it had a vulnerability, you can point to another program that did the same thing but did not have that vulnerability. So progress is possible!”

UPDATE (Aug. 12, 2021, 18:35 UTC): Corrects Agoric’s name. We regret the error.

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