Potential users of an arbitrage-based decentralized finance (DeFi) project have been left out of pocket after a $2 million embezzlement.
Web3 security firm CertiK reported the incident on February 21 following a Twitter notification from Hope Finance alerting users to the scam.
#CommunityAlert @naděje_fin announced that the community had been defrauded of approximately $2 million, making it the largest #exitscam to arbitration in 2023.
1.86 million USD was transferred to @TornadoCash.
Hope_fin has posted the steps for users to download their staked LPhttps://t.co/hJbFXiKujt
— CertiK Alert (@CertiKAlert) February 21, 2023
Details about the project are hard to come by. The platform’s Twitter account was launched in January 2023 and outlined plans for an algorithmic stablecoin called the Hope token (HOPE) that dynamically adjusts its supply relative to the price of Ether (ETH).
Posts on the account claim that the scam was carried out by a Nigerian national who transferred over $1.86 million to Tornado Cash shortly after the platform launched on February 20. A member of the CertiK team told Cointelegraph that the fraudster changed the details of the smart contracts, leading to the depletion of funds from the Hope Finance genesis protocol:
“It appears that the fraudster changed the TradingHelper contract, which meant that when 0x4481 calls OpenTrade on GenesisRewardPool, the funds are transferred to the fraudster.”
According to a February 13 tweet, the Hope Finance smart contract was audited by a Cognitos official. Cointelegraph reviewed audit summary that identified two major vulnerabilities in the contract functionality.
This included an incorrect modifier and the possibility of reentrancy attacks. Despite flagging these vulnerabilities, Cognitos found that the smart contract code successfully passed the audit.
After the scam, Hope Finance shared information with users so they could withdraw staked liquidity from the protocol via the emergency withdrawal feature.
Steps to download your staked LP from this fucking scam protocol
1. Go to this linkhttps://t.co/HjuvQyxbUX
2. connect your wallet
3. click on emergency downloadEnter 00000000000000000000000000000000000000000000000000000000002 pic.twitter.com/5RxtgKXgoo
— Hope Finance (@Hope_fin) February 21, 2023
Decision is an Ethereum layer 2 roll-up network that enables exponential scaling of smart contracts. Two layer 2 protocols continue alongside Optimism handle the growing amount transactions within the Ethereum ecosystem.
