Manipulation, Hacks And System Errors Lead To Losses For Cryptocurrency Users And Exchanges – Technology – United States – Mondaq News Alerts

25 February 2020

BakerHostetler

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Since Friday, Feb. 14, 2020, decentralized lending protocol bZxwas twice exploited by attackers using a combination of methodsinvolving flash loans and price manipulations to profit oncryptocurrency swaps, resulting in total losses of approximately$954,000. The first attack took place on Feb. 14 and resulted inthe attacker pocketing 1,193 ETH (approximately $318,000) after abug in the bZx's smart contract code failed to run standardsafety checks that should have prevented a highly leveragedposition on ETH/BTC trading pairs. The second attack took placedays later, resulting in losses of 2,388 ETH (approximately$636,000), perpetrated, in part, via oracle manipulation on theprice of synthetic USD Coin stablecoins.

Last week, the IOTA Foundation shut down the entire IOTAcryptocurrency network after hackers exploited a vulnerability inTrinity, the mobile and desktop wallet app developed by the IOTAFoundation, and stole approximately $1.6 million from at least 10high-value IOTA accounts. IOTA announced this week that it hadreleased a "safe" version of Trinity in response.

Earlier this week, crypto exchange FCoin notified users that itwas unable to process withdrawal requests, as it revealed a nearly$130 million shortage of assets, a result of system problems and"decision errors" made by exchange leadership. Theexchange's novel yet controversial model, called"trans-fee mining," designed to incentivize trading byissuing exchange tokens, made FCoin one of the largest exchanges byvolume.

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Manipulation, Hacks And System Errors Lead To Losses For Cryptocurrency Users And Exchanges - Technology - United States - Mondaq News Alerts