The Poly Hack and Crypto’s Trust Issues

in #crypto3 years ago

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In crypto, you shouldn't have to ask who you can trust. But as the Poly Network hack and its resolution have showed, you absolutely do.
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And now, folks, it’s time for: Who do you trust? Hubba hubba hubba, money money money. Who do you trust? Me, I’m giving away free money. And where’s the Batman? At home, washing his tights!” – The Joker (Batman 1989)

When the Poly Network was hacked early last week for about $600 million worth of various cryptocurrencies, the attack was notable mainly for its size. It’s the biggest crypto hack ever – though not by much over 2018’s $500 million Coincheck hack. From 50,000 feet, it seemed like the logical progression of a series of hacks going back to the exploit that allegedly brought down Mt. Gox circa 2013, itself worth about $473 million at 2014 BTC prices.

In short, despite its size, the Poly hack just wasn’t all that interesting.

Then things got weird.

David Z. Morris is CoinDesk's chief insights columnist.
The hacker reportedly entered multiparty negotiations including Poly, miners, security firm Slowmist and the stablecoin issuer Tether. The nature of those negotiations still isn’t entirely clear, but we do know at least two things: Poly had offered the hacker a $500,000 “bug bounty” to return the stolen funds, and Slowmist claims it identified the hacker’s IP and email addresses (though the hacker denied being compromised).

A third strong hypothesis is that the hacker was beginning to realize he/she/they would have a very hard time liquidating anything close to $600 million in tokens (we don’t know the hacker’s gender, but I’ll be using “he” throughout for simplicity, and because odds are it’s accurate). Binance CEO Changpeng Zhao promised his exchange would “freeze” any hacked funds sent to his platform, while Tether actually took the step to freeze about $33 million worth of its USDT stablecoin taken in the hack.

There may have been other factors, but these alone were likely enough to trigger what came next: The hacker returned the money. By Thursday, Aug. 12, the hacker had placed almost all of the hacked funds (minus those frozen tethers) into a multi-signature wallet shared with the Poly team.

In other words, this is the proverbial dog who caught a car. After pulling off the biggest crypto heist of all time, the hacker didn’t know what to do with their loot.

Largest Hack in Crypto History? $600M in Crypto Potentially Stolen From DeFi Platform Poly Network

Face turn

Now, with help from the Poly Network itself, the hacker is trying to make what in pro wrest
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