ShadowFi Exploit Allows $300,000 Liquidity Drain and Massive Cryptocurrency Loss

ShadowFi tweeted about the cyberattack. Hackers have made it possible to attack DeFi systems with a crypto-specific effort known as ShadowFi. Peckshield, a leading blockchain security firm, sounded the alarm and announced that the cost to use was around $300,000.

How did the hack happen?

According to ShadowFi, an attacker drained his liquidity pool contract, leaving him zero funds. Peckshield claims that the protocol has been exploited due to flaws in the SDF token.

The hacker was named NeorderDAO by the blockchain security company. A spokesperson for the company said the hacker’s name was found in the company’s internal database.

Significant Cryptocurrency Losses Caused by Tornado Cash Use

Peckshield claims that hackers deposited the looted funds into Tornado Cash. Tornado Cash has done more harm than good for the cryptocurrency industry. Criminals sent money from compromised systems using encryption software.

Since 2019, the program has been used to launder around $7 billion from multiple cryptocurrency exchanges. Even the famous North Korean pirate gang Lazarus Gang used Tornado Cash to transfer $455 million. And hackers stole almost $96 million from Harmony Bridge using Tornado Cash.

Due to its widespread abuse, the US Treasury Office of Foreign Assets Control (OFAC) banned Tornado Cash last month. OFAC expressed disapproval of the role of privacy-protecting programs in putting several crypto networks at risk. Due to the ban, reputable websites had to stop hosting Tornado Cash.

Despite the ban, hackers continue to use the program for money transfer. Some in the Bitcoin community criticized OFAC’s decision to ban Tornado Cash when it was first announced. Businesses that followed OFAC’s orders and did not accept Tornado Cash came under heavy criticism.

ShadowFi guarantees to fix the problem

More and more often, officials and stakeholders in the bitcoin industry are finding themselves the victims of attacks on cryptocurrency exchanges. US regulators have included Tornado Cash in their ban on closing certain vulnerabilities exploited by hackers.

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However, Tornado continues to operate despite the ban because the person who took advantage of ShadowFi’s latest use of the crypto mixer has yet to be caught. Reports state that the exploiter traded around 8.4 SDF tokens for 1078 BNB before switching to Tornado.

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About Hama Amefiz

Amefiz is a professional blockchain, cryptocurrency and tech journalist, regular contributor to newsbsc.com who is writing analysis about the latest developments in the cryptocurrency and blockchain space.

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