The price of Bitcoin is holding up quite well in the short-term as Robinhood fires 23% of its workforce, Bitcoin cheerleader and now former CEO of MicroStrategy quits his post, and another security debacle.
Security infrastructure in any unregulated market is paramount simply because the assets aren’t insured.
Once taken, might as well gift the robbers a card on the way out.
The stakes become higher when hackers know they are less likely to be chased after or quantified once they steal what they are looking for.
Regulated and insured industries are tied to government oversight and when that’s the case, congressional committees often look into industries they are directly tied to if things run amuck.
The optics couldn’t be worse for crypto as we bounce from consecutive security breakdown to the next.
It’s almost as if the last coin not getting hacked will be the last one standing.
It’s getting that bad as the crypto “winter” has triggered a wave of bankruptcies and encouraged smash-and-grab hacking schemes preying on crypto holders who are down and out.
This time it was Solano, which is the 4th biggest cryptocurrency, with a market cap only behind Cardano (ADA), Ethereum (ETH), and the bellwether Bitcoin (BTC).
Solana, known for its speedy transactions, has become the target of the crypto most recent hack after users reported that funds have been drained from internet-connected “hot” wallets.
An unknown actor drained funds from 7,767 wallets on the Solana network resulting in upwards of potentially $50-$100 million.
The attack – which has affected only “hot” wallets or wallets that are always connected to the internet, allowing people to store and send tokens easily – does not appear to be limited to Solana.
Users have reported that USDCs were emptied as well.
The attack has compromised other wallets including Phantom, Slope, Solflare, and TrustWallet. Wallets drained should be treated as compromised and abandoned, Solana warned as it encouraged users to switch to hardware or “cold” wallets.
Phantom, a fast-growing Solana-based wallet that hit $1.2 billion in valuation in January, said it’s “working closely with other teams to get to the bottom of a reported vulnerability in the Solana ecosystem.”
Developers still don’t know how the hack happened and might never figure it out.
The hackers are that far ahead of the game.
Solana spokesperson Chris Kraeuter said the company’s engineers “are currently working with multiple security researchers and ecosystem teams to identify the root cause of the exploit, which is unknown at this time.”
The Solana attack comes hot on the heels of hackers exploiting almost $200 million in digital assets from cross-chain messaging protocol Nomad.
The “free-for-all” attack, which saw more than 41 addresses drain $152 million — 80% of the stolen funds – was made possible by a recent update to one of Nomad’s smart contracts that made it easy for users to spoof transactions.
The word is out there and hackers are clued up, they are moving fast to take advantage of the green shoots nature of the security infrastructure.
An infrastructure not tested by time is prone to gaps in defense and that is what we are seeing.
I have the conviction that if the bellwether Bitcoin is taken down by hackers, that could be the beginning of the end for crypto for this iteration.
In that unlikely scenario, we will experience a precipitous drop from the $23,000 per coin today.
