DeFi Protocol Convergence Exploited, Causing Its Token's Price to Collapse
- WBOYOriginal
- 2024-08-02 12:33:20395browse
The attacker exploited a vulnerability in Convergence's codebase, minting 58 million CVG tokens. The tokens were then swapped for 60 wrapped ether (wETH) and 15,900 crvFRAX stablecoin using liquidity pools on Curve.
Decentralized finance (DeFi) protocol Convergence was hit by an attack on Thursday, leading to a massive drop in its token’s price.
The attacker exploited a vulnerability in Convergence’s codebase, minting 58 million CVG tokens, as reported by web3 security auditing firm QuillAudits. These tokens were then swapped for 60 wrapped ether (wETH) and 15,900 crvFRAX stablecoin using liquidity pools on Curve.
According to blockchain data from Etherscan, the attacker then converted the stolen funds to ether (ETH) and sent them to Tornado Cash, a privacy-focused mixing service.
The attack resulted in a loss of approximately $210,000, as reported by QuillAudits. However, the impact on CVG holders was much more significant.
Before the attack, the fully diluted value (FDV) of the token was $17 million, but this was quickly wiped out. The price of CVG dropped by 99%, going from around $0.12 to $0.0004 in the Curve liquidity pools.
In response to the exploit, Convergence advised users to refrain from interacting with the protocol until further notice.
Rising crypto prices lead to increased theft
The total amount of cryptocurrency stolen in hacks worldwide more than doubled in the first six months of 2024 compared to the same period last year, according to blockchain researchers TRM Labs. This increase is attributed to a small number of large attacks and rising cryptocurrency prices.
As of June 24, 2024, hackers had stolen over $1.38 billion worth of cryptocurrency, compared to $657 million during the same period in 2023. The median theft size also increased, being one-and-a-half times larger than the previous year.
Cryptocurrency prices have generally recovered from the lows hit in late 2022 following the collapse of Sam Bankman-Fried’s crypto exchange, FTX. Bitcoin reached an all-time high of $73,803.25 in March this year.
Among the largest crypto losses this year was the theft of $308 million worth of bitcoin from the Japanese crypto exchange DMM Bitcoin, which the company described as an “unauthorised leak.” Such large-scale losses are rare but highlight the ongoing vulnerability of cryptocurrency companies to hacks and cyberattacks.
In 2022, stolen cryptocurrency volumes were around $900 million, partly due to the more than $600 million stolen from a blockchain network linked to the online game Axie Infinity. The US attributed that theft to North Korean hackers. The United Nations has accused North Korea of using cyber attacks to help fund its nuclear and missile programs, although North Korea has denied these allegations.
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