On November 10, 2023, Poloniex, a leading crypto exchange, was the victim of a major hack. The incident led to a staggering loss of digital assets across both Ethereum and Tron chains, amounting to a total of $118,179,567. This news has shaken the crypto industry, as it is one of the largest hacks ever to target a cryptocurrency exchange.

The Hack in Detail

The Poloniex hack was not a random act but a well-planned and executed operation. The hacker(s) identified a flaw in the system that allowed them to process several withdrawals simultaneously. This is akin to having multiple tabs open on a web browser and executing the same operation at the same time across all tabs. In the context of Poloniex, this operation was a withdrawal request. This flaw in the system led to a negative balance, but the transactions were still approved.

In simpler terms, imagine if you had $500 in your bank account and you tried to withdraw $600. Normally, the bank would prevent this transaction due to insufficient funds. However, due to the flaw in Poloniex’s system, the system failed to adequately check for sufficient balance when multiple withdrawal requests were made at the same time. This resulted in a negative balance, but the transactions were still approved.

The hacker(s) created new accounts on the exchange and inflated the balances of these accounts. This was likely achieved through a series of fraudulent transactions or manipulations within the system. With the inflated balances, the hacker(s) were able to withdraw significant amounts, leading to a substantial loss for Poloniex.

The Stolen Assets

The stolen assets from the Poloniex hack spanned across both Ethereum and Tron chains. Here’s a detailed breakdown:

Ethereum Chain

• USDT: 11,030,540 tokens, valued at $11,033,022
• ETH: 4,966 tokens, valued at $10,340,022
• USDC: 4,980,103 tokens, valued at $4,980,103
• SHIB: 577,097,062,174 tokens, valued at $4,739,750
• ELON: 25,547,744,052,696 tokens, valued at $4,156,917
• Other tokens valued at $7,786,104
• Total value: $62,917,454

Tron Chain

• USDT: 21,736,157 tokens, valued at $21,736,157
• BTC: 380 tokens, valued at $14,158,502
• USDD: 3,648,664 tokens, valued at $3,648,664
• WBTC: 63 tokens, valued at $2,336,380
• WETH: 919 tokens, valued at $1,915,865
• Other tokens valued at $11,466,545
• Total value: $55,262,113

So, the total value of all stolen assets from both chains is $62,917,454 (Ethereum) + $55,262,113 (Tron) = $118,179,567.

The Aftermath

In the immediate aftermath of the Poloniex hack, the company swiftly confirmed the incident and temporarily halted trading. They assured users that they would reimburse any lost funds. In an unusual move, Poloniex offered a 5% bounty to the hackers if they returned the stolen assets.

PeckShield, a cybersecurity firm, was one of the first to confirm the hack and provide additional details. The Poloniex hack is still under investigation, so some details are still unknown. However, PeckShield has provided some insights into how the hackers were able to exploit the vulnerability in Poloniex’s smart contracts.

Arham Intel, another cybersecurity firm, has also confirmed the hack. Poloniex is working with law enforcement to track down the hackers and recover the stolen funds. However, it is unclear how much of the stolen funds Poloniex will be able to recover. Arkham Intel has offered a bounty of 10000 ArKM for information leading to the arrest and conviction of the hackers responsible for the attack.

Justin Sun, the founder of the Tron network and owner of Poloniex, has stated that he is “saddened and frustrated” by the hack. He has also stated that Poloniex is committed to recovering the stolen funds and compensating users.

CZ, the CEO of Binance, has tweeted that Binance is monitoring the situation closely and is ready to assist Poloniex if needed. He has also reminded Binance users to be extra vigilant and to take all necessary precautions to protect their funds.

Conclusion

The Poloniex hack has had a significant impact on both the exchange and the wider crypto community. It has highlighted the importance of robust security measures and the potential vulnerabilities that exist even on established platforms.

For Poloniex, the hack has been a major setback. However, their swift response and commitment to reimbursing users have been commendable. The offer of a bounty to the hackers for returning the stolen assets is an unusual but proactive approach.

For the crypto community, the hack serves as a stark reminder of the risks associated with digital assets. It underscores the need for users to be vigilant about security and not to put all their eggs in one basket.

The lessons learned from this incident will likely lead to improved security measures on Poloniex and other exchanges. It’s a wake-up call for the industry to continuously evolve and enhance security protocols to protect users and their assets.

In the end, the way forward is clear: continuous improvement in security measures, increased transparency from exchanges, and informed vigilance from users.