- Synthetix has suffered the loss of $37 million to the hands of a hacker
- CEO Kain Warnick believes that attack was executed automatically by an arbitrage bot
- A bug bounty has been issued as a reward
The Crypto space has from the early days been tormented by hackers. The technology is fairly new and security flaws are common. There have been numerous incidents of exchanges falling prey to the hands of notorious hackers. Even Binance, the world’s no. 1 exchange by volume and the most popular exchange among cryptocurrency enthusiasts reported that a group of hackers was able to breach the exchange’s security and gain access to a lot of sensitive user information. That is just one example amongst many. And now the most recent incident is that of Synthetix, a synthetic asset issuance platform built on the Ethereum blockchain.
Tokens frozen pending investigation
On June 24th, The Block reported that the Ethereum based asset issuance platform has suffered a loss of more than $37 million synthetic Ethereum (sETH) via an oracle attack. The actual number is yet to be determined because it is fairly difficult to calculate due to the relative liquidity of sETH on secondary markets. Synthetix is one of the most renowned synthetic asset platforms that have gained a lot of attention lately. Built on the Ethereum blockchain, it is a multi-tier issuance platform, collateral type, with an exchange. The platform allows the user to mint synthetic assets from cryptocurrencies to fiat currencies to derivatives. Just like Uniswap, synthetics token can be easily swapped through the Synthetix exchange platform without a counterparty.
Kain Warwick, CEO of Synthetix, disclosed the incident in the Synthetix discord channel. He stated:
“There has been an incident with the price feed of sKRW, we are currently investigating the root cause, but during the time when the price feed was returning the wrong value we believe an automated arb bot converted into sKRW and then into sETH.”
Warwick believes this was done automatically by an arbitrage bot. Synthetix is now looking for the owner of this said bot to fix this issue. The company has even offered a bug bounty as a reward to speed things up. The Synthetix team has complete control over its smart contracts and they have disabled transfers within the system until the issue is resolved.
Synthetix was started as a stablecoin and the team soon realized that the applications could reach out far beyond that concept. The company has operated under the brand name of Haven and has raised around $30 million via private and public sales. The company’s roadmap shares various similarities with MakerDAO. Synthetix has come a long way ever since and is revolutionizing the synthetic assets industry within the decentralized finance ecosystem.