Ethereum: The Choice for Converting Stolen Funds
Stolen funds from the Indian cryptocurrency exchange WazirX are currently being converted into Ethereum, a move experts believe is aimed at avoiding blacklisting by authorities. According to data from analytics platform Spot On Chain, the attackers have chosen to prioritize Ethereum over other ERC-20 tokens due to its inability to be blacklisted.
The Advantages of Ethereum
The ERC-20 token standard provides developers with the ability to implement mapping functions in smart contracts to maintain a list of blacklisted addresses, enabling them to modify the transfer function to check against this list before processing transactions. In contrast, Ethereum does not allow the modification of address permissions, preserving its core decentralized and trustless nature.
Blockchain security company PeckShield supports this notion, stating, “A quick switch to Ethereum could help hackers protect their funds before authorities or centralized token issuers take any precautions.”
An example of this capability being exploited was the April 2020 theft of $25 million from the dForce decentralized finance (DeFi) protocol, showcasing the potential hurdles faced by attackers trying to utilize stolen tokens that can be blacklisted. Tether’s USDT has also utilized this feature to blacklist multiple illegal transactions over the years.
The Conversion Process
As of the time of reporting, the attackers have successfully converted $201 million worth of stolen assets into Ethereum, with significant amounts also exchanged for Polygon, Pepe (PEPE), and Shiba Inu. The remaining $12 million worth of Chromia (CHR), Celer Network (CELR), Frontier (FRONT), and Ooki (OOKI) tokens are still available for exchange.
Aftermath of the Attack
On July 18, WazirX’s security company, Cyvers, detected several suspicious transactions from the exchange’s multi-signature wallet to new addresses, confirming an attack that led to the theft of $234.9 million worth of assets. Speculation by on-chain searcher ZachXBT suggests the notorious North Korea-backed Lazarus Group’s involvement, citing similarities with previous attacks orchestrated by the group.
The hack resulted in a drop in SHIB and WXR tokens, with SHIB witnessing a more than 9% decrease post-attack. The native token of the exchange, WRX, also fell by 13% in the hours following the incident.
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