In a failed upgrade, the Compound, Ethereum-based decentralized finance (DeFi) network mistakenly gave out $90 million to its customers.
Compound may even prepare to toss in a 10% reward, according to the report. Those who don’t return the money, on the other hand, risk being doxxed or reported to the Internal Revenue Service, according to Compound’s founder and comptroller, Robert Leshner.
Leshner apologized for being a loser, moron, and other derogatory terms, but there was already harm to the crypto community. A user responded to Leshner by saying that cooperating with the Feds goes against everything crypto stands for. Even worse is doxing someone and reporting them to the IRS, knowing that the agency will use the fear of violence to collect taxes.
In his reaction to Leshner, another user said it even more clearly. Mr. Delete Button tweeted that people burnt their trust equity with him. He won’t be using Compound anymore and will be encouraging everyone he knows in space and who is entering space to avoid him and his product. It was all a misunderstanding, according to Leshner.
The tweet was taken out of context and meant to imply that most of the addresses that received COMP erroneously were active users of Coinbase, FTX, Binance, and other cryptocurrency exchanges who had their information stolen, unlike black-hat attackers. This is what Leshner clarified to Threatpost. The Compound interface is hosted on IPFS and does not gather any user data. Compound’s native currency token, COMP, had lost 13% of its value just 24 hours following Leshner’s Sept. 30 tweet, according to Bleeping Computer. Compound’s price has dropped 10.99 percent in the last seven days, according to Coinbase.
According to Leshner of Threatpost, the flaw caused the misallocation of COMP tokens from the user-incentive pool. He also stated the retrieval of 163,000 COMP tokens, but 183,000 remain unaccounted for. Today’s COMP price means the platform still lacks around $58,528,890.
Leshner noted that community developers had submitted a patch to token holders for approval, fixing the underlying issue and restoring correct COMP distribution.
There Will be More Fraud and Attacks in DeFi
A few weeks earlier, PolyNetwork, a partner DeFi platform, lost $610 million in robbery. They eventually offered Mr. White Hat a job as PolyNetwork’s top security officer just to be able to retrieve the stolen bitcoin.
Mr. White Hat declined the job and instead stated that the breach meant to teach the DeFi community about security.
Over the last several weeks, hackers also targeted the Cream Finance DeFi platform, which stole $29 million in Amp currency.
The main difference between the Compound circumstance and the Compound situation is that there was no committed crime. Cybercriminals targeted PolyNetworks and Cream Finance. Compound accidentally gave away the crypto.
Another researcher speculated that this could be a major red flag that decentralized finance isn’t safe enough to be trustworthy. According to John Bambenek of Netenrich, the complete lack of central authority in cryptocurrencies was an excuse for firms to sit on their hands. At the same time, it took their members’ life savings, according to John Bambenek of Netenrich. Now that Compound learned that the same blade cuts in both directions, it stunned them, to say the least, that there is nothing they can do. If Compound can’t put in place simple financial controls to detect and prevent this, I’m not optimistic that other types of fraud will be far behind in attacking their platform.
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