Crypto hocus-pocus sees $6.5 million go 'poof' from Abracadabra thanks to a Cauldron problem that let a user exploit Magic Internet Money (I swear)

SoftwareCrypto hocus-pocus sees $6.5 million go ‘poof’ from Abracadabra thanks to a Cauldron problem that let a user exploit Magic Internet Money (I swear)When you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.

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(Image credit: John M. Lund via Getty Images)

A magician holding a rabbit.

Enter one dark wizard, an unknown user who began their attack with 1 ETH (roughly $2,300), and per a report fromblockchain security firm Certiktook advantage of a “rounding issue.” What they seem to have done is spam loans using a piece of confusion software called TornadoCash: borrowing and repaying repeatedly in a manner that had them not-so-slowly accruing profit, and then successfully transferring those funds to another crypto-wallet.

Hi @MIM_Spell, you may want to take a look (w/ $6.49M Loss) pic.twitter.com/uHs0JweuoMJanuary 30, 2024

The MIM development team acknowledged the exploit andsays it has now been fixed, while the MIM stablecoin has, after going down to around 77 cents in value at its lowest, returned to the high 90 cents range. But remember: the whole point of these so-called stablecoins is that they stay 1:1 with their pegged currency. So we’re not at the final act yet.

The team further claim that victims will be compensated via a buy-back and burn process (liquidating some currency to boost the overall pot’s value). Abracadabra is a decentralised finance platform, in crypto terms a DeFi, and the whole point of these is that they’re supposed to be secure, robust, impregnable. And yet here we are: One attacker has made off with several million of crypto assets, with MIM and Abracadabra developers only able to say it’s been contained.

Magic Internet Moneynow saysthat “following the recent exploit, we’ve taken swift action to secure the protocol. The DAO treasury is set to fully collateralize the $6.5M affected, ensuring safe operations. We’re moving forward with confidence.”

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To which, I guess, one can only add: “tah-dah!” This isn’t even Magic Internet Money’s first dodgy moment, with it having to be de-pegged during the2022 Terra crash, and you do wonder who keeps giving something like this the benefit of the doubt. People really do put money into these things and, you know, so often the crypto moral lesson turns out the same. I wouldn’t say it’s magic but: Now you see it, and now you don’t.

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