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There’s always another nightmarish crypto hack around the corner

There’s always another nightmarish crypto hack around the corner Image
  • Posted on 07th Aug, 2022 23:03 PM
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Welcome back to Chain Reaction. Last week, we looked at the near-term future for crypto gaming as VCs zero in on where to place consumer bets. This week, we’re looking at hardware wallets and the endless journey towards feeling safe in the crypto world. To get this in your inbox every Thursda…

Welcome back to Chain Reaction.

Last week, we looked at the near-term future for crypto gaming as VCs zero in on where to place consumer bets. This week, we’re looking at hardware wallets and the endless journey towards feeling safe in the crypto world.

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A weekly dispatch from the desk of TechCrunch crypto editor Lucas Matney:

The world of crypto can be a cruel and unforgiving place, and while VCs and crypto hedge funds have been happy to bail out institutions, sometimes consumers dabbling in the space find themselves left out in the cold. This week, a couple of pretty high profile hacks cost crypto investors millions, but it was the smaller, more mysterious one that likely left newbie buyers clutching their private keys and praying for the best.

Putting money anywhere is an exercise of trust, which sometimes makes it funny that the the word “trustless” has been a leading phrase in crypto religious creeds that investors use to gain converts. All a user must do is hold their private key near and dear and they can trust that their money will always be there without having to place any trust in a traditional financial institution. But consumers are discovering some of the long-known fine print to that promise.

This week, thousands of Solana users logged into their crypto wallet apps to discover that all of their funds had disappeared. Many of these users claimed they hadn’t used the wallets in weeks or months, ruling out some sort of mass signature of a malicious contract. While this ended up being a lowly seven-figure hack, the mystery was notable. Early-on, users weren’t sure whether this was an attack on the underlying Solana network or an underlying service provider that multiple wallets relied on. Amid all the confusion, wallets continued to be drained eventually emptying the contents of upwards of 8,000 individual accounts.

Investors in the Solana ecosystem (the network’s founder dropped some choice Twitter retweets) complained that the media was focusing more heavily on the single-digit millions exploit when the Nomad bridge had been hacked for $190 million just a day prior. But it was the nature of the attack that was scarier than the dollar amount.

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