Euler Finance, a noncustodial lending protocol based on the Ethereum blockchain, had been hit by a massive attack that resulted in the loss of $196 million worth of cryptocurrency. The platform has demanded that the hacker responsible return 90% of the funds within 24 hours, or face legal consequences.
Euler Finance had initially attempted to negotiate with the attacker, sending a civil message asking for potential next steps. However, it seems that the hacker has very little incentive to follow through with the deal, as they would be holding onto $19.6 million even if they return 90% of the funds. If not returned, they threatened to launch a $1 million reward for information that leads to the arrest of the hackers and the return of all funds.
Observers have pointed out that the hacker could simply offer a larger sum of money to anyone who tracks them down and does not reveal their identity to Euler Finance. “If I was the hacker, I’d simply say ‘to anyone who manages to track me down, I will give you $2 million not to tell Euler,'” one observer said.
Euler Finance is already working with law enforcement agencies in the US and the UK, as well as blockchain intelligence platforms such as Chainalysis and TRM Labs, to help track down the hacker. The platform has also engaged with the broader Ethereum community to aid in its efforts.
The vulnerability that led to the hack was not discovered during the smart contract audit that Euler Finance underwent. The vulnerability had existed in the smart contract for eight months until it was exploited on March 13. Euler Finance was able to stop the flash loan attack promptly by blocking deposits and the “vulnerable” donation function.
The hack on Euler Finance highlights the ongoing vulnerability of decentralized finance protocols, which have seen a surge in popularity in recent years. As the industry continues to grow and attract more users, it is likely that attacks such as these will become more frequent, making it even more important for platforms to invest in robust security measures.