Loopring, a decentralized finance (DeFi) protocol on Ethereum, has been hacked, resulting in a $5 million loss. The attack targeted Loopring’s ‘Guardian’ two-factor authentication (2FA) service, designed to enhance the security of its smart wallet, known as “Ethereum’s most secure wallet.”
But how did hackers crack this supposedly impenetrable system? And what does it mean for your crypto holdings? Read on to find out…
The Guardian service allows customers with specific wallets to invite trusted wallets for security tasks, like freezing a compromised wallet or recovering it if the seed phrase is lost. However, a hacker exploited a vulnerability in Loopring’s Official Guardian service, performing unauthorized recoveries on wallets that used a single guardian. Wallets with multiple guardians or those using different types of guardians were not affected.
Scope of the Attack
Blockchain data analysis revealed that two wallets were involved in the breach, with one wallet being completely drained of about $5 million in tokens.
In response, Loopring announced on social media platform X that it is working with Mist Security to identify the vulnerability in the 2FA service. To protect users, Loopring has temporarily suspended all Guardian and 2FA functions, preventing further unauthorized access.
Loopring is actively trying to identify the hacker and has requested the community’s help in providing any relevant information. Since the breach was disclosed, Loopring’s native token, LRC, has dropped by about 5% in the last day, currently trading at $0.2171, reflecting the market’s reaction to the incident.
This incident highlights the ongoing challenges in securing decentralized finance platforms and underscores the need for strong, multi-layered security measures.
Feeling nervous about your crypto holdings? Learn more about crypto security here: A Comprehensive Guide to Keeping Your Crypto Safe
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