The current DeFi cyberattacks exploited what is know as a reentrancy bug. This is a form of manipulation that virtually allows a hacker to trick a protocol allowing them to withdraw an excess supply of tokens they don’t actually have or own.
This defect is becoming widespread in the crypto sector, particularly in the DeFi space which got hit again right when the new month came in. Rari Capital, Saddle Finance, and Fei Protocol all suffered a massive attack that resulted in a loss of close to $90 million worth of crypto assets. BlockSec twitted that due to the reentrancy bug, Rari Capital and Fei Protocol suffered the most with a combined loss of more than $80 million.
Rari Capital allows users to create Fuse pools where they can borrow and supply ERC-20 tokens. This permissionless lending protocol’s key user is Fei, which supplies $FEI to Rari’s lending markets for it to increase its liquidity which makes the stablecoin stronger. This close relationship made them merge the 2 projects last year to be more robust.
After this incident, Fei Protocol’s team is in the knowledge of the exploit on diverse pools of Rari Fuse and added to detect the root cause along with stopping the entirety of the borrowing, aiming to minimize the occurrence of further detriment. They also suspended all borrowing operations to put a stop to the exploitation of funds and any potential transfers.
Yet, the attackers have already begun moving the hacked crypto funds to Tornado Cash, a protocol that preserves the privacy of the withdrawer. It uses a smart contract that accepts ETH deposits that can be withdrawn by a different address using his private key even without an ETH balance. Making it more complicated to track by investigators.
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