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The crypto sector is still plagued by heists, with reports of significant sums being taken from companies that deal in digital currencies almost monthly. Blockchain bridges, Nomad appear to be the new target for hackers, whereas cryptocurrency exchanges were previously the main focus.
Bridges are the technical framework that enables users to transfer assets between several blockchains, the virtual ledger that powers the majority of the world’s cryptocurrencies. A bridge service “wraps” the money when it exchanges one coin for another so that it can operate on the other blockchain.
According to Tom Robinson, chief scientist at blockchain analysis company Elliptic, a wrapped coin does not completely transform into another kind of cash; rather, “it just looks like it,” he told CNN Business. Instead, a “token” is created to serve as the new coin’s representation on the alternative blockchain. I entrust the bridge with my Bitcoin. In exchange for doing that, I am given a Bitcoin token on the Ethereum blockchain, which I can then transfer through the Ethereum blockchain as a wrapped asset, “R. Robinson explains.”
Elliptic claims that these coin reserves are luring hackers and making blockchain bridges attractive targets for robberies. They’re simply enormous honeypots. They simply store enormous quantities of cryptocurrency, making them very clear targets, “Robinson stated.
According to Elliptic, there have been bridge thefts totaling $1.83 billion so far, with the majority ($1.21 billion) occurring only this year. Six significant bridges have already experienced thefts in 2022, including the California-based Harmony bridge, which lost $100 million in late June, and the Ronin bridge, owned by Axie Infinity, which lost $625 million in March.
According to blockchain security and data analytics firm Peckshield, in the most recent instance, hackers allegedly stole cryptocurrency from cryptocurrency bridge provider Nomad worth $190 million. (Nomad has not verified the complete loss amount.)
In an effort to refund stolen payments to users, Nomad is collaborating with chain analysis company TRM Labs, according to a tweet from Nomad on Wednesday.
Late on Monday, Nomad sent out its first tweet in response to the issue, warning users to be “alert of impersonators posing as Nomad and offering bogus addresses to collect funds.”
Peckshield claimed that Nomad’s system was systematically shut down in groups, and that stolen coins included ether and a few stablecoins pegged to the US dollar. In a tweet, a researcher at the cryptocurrency investment firm Paradigm described the attack as “one of the most chaotic hacks that Web3 has ever
Just a few days before the event, Nomad disclosed a number of illustrious investors who had contributed to a $22 million fundraising round in April to “help grow a security-first cross-chain messaging system,” including Coinbase Ventures, OpenSea, and Crypto.com Capital.
Nomad Hack: Loss of confidence in crypto startups
Concerns about security and confidence in the cryptocurrency business are only increased by the rising number of bridge attacks. In the midst of a spike in cryptocurrency prices and usage, several of the worst cryptocurrency thefts ever occurred just last year. Despite a significant decline in price since then, cryptocurrency is still a potentially profitable investment.
According to a Federal Trade Commission study released in June, cryptocurrency scams have also grown in popularity, with con artists allegedly stealing more than $1 billion from the beginning of 2021 through March of this year.
Opinions expressed by California Gazette contributors are their own.