Defrost Finance Says Hacked Funds Have Been Returned

The hack, which some observers had characterized as a rug pull, was estimated to have netted $12 million.

AccessTimeIconDec 26, 2022 at 3:20 p.m. UTC
Updated May 9, 2023 at 4:05 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Defrost Finance, which on Sunday said its V1 and V2 products had been exploited, said the hacker in the larger V1 attack has returned the funds.

"We will soon start scanning the data on-chain to find out who owned what prior to the hack in order to return them to the rightful owners. As different users had variable proportions of assets and debt, this process might take a little [time]," the decentralized-finance protocol said in a post linked on its website.

  • How Spool Is Aiming to Help Institutions Enter DeFi
    11:05
    How Spool Is Aiming to Help Institutions Enter DeFi
  • How a New Tax Proposal From the IRS Could Impact DeFi
    00:46
    How a New Tax Proposal From the IRS Could Impact DeFi
  • Curve Finance’s Stablecoin Maintains Peg as Others Struggle: Kaiko
    01:27
    Curve Finance’s Stablecoin Maintains Peg as Others Struggle: Kaiko
  • CFTC Commissioner Mersinger Discusses Spot Bitcoin ETF Optimism, Crypto Regulation
    12:40
    CFTC Commissioner Mersinger Discusses Spot Bitcoin ETF Optimism, Crypto Regulation
  • In a tweet thread posted on Sunday, the team said a first attack used a flash loan to drain funds out of its V2 product. A second larger attack used the owner key to exploit V1. The protocol, which offers leveraged trading on the Avalanche blockchain, didn’t say how much had been taken.

    Blockchain security firm PeckShield, citing “community intel,” said at the time that the exploit may have been a rug pull that made off with $12 million. Earlier Monday Certik, also a security company, said it had been unable to contact members of the team and posted a graphic indicating it was treating Defrost as an exit scam. Defrost's Twitter account isn't configured to accept private messages.

    A rug pull, or exit scam, can occur when developers create and establish a liquidity pool and then remove the funds and disappear after investors have bought the related token. Usually, the team behind the scheme goes silent and can't be contacted. Defrost Finance, however, announced the attack and said in a tweet that it was willing to negotiate with the people responsible for a return of the funds.


    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Sheldon Reback

    Sheldon Reback is a CoinDesk news editor based in London. He owns a small amount of ether.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


    Read more about