Cypher Protocol Loses Over $1 Million in Exploit

Cypher Protocol, a decentralized loyalty program running on the Solana blockchain, has suffered a major security breach that resulted in the loss of over $1 million worth of tokens. The exploit was detected on Monday, August 7, by the protocol’s team, who immediately froze the smart contract to prevent further damage.

Inside the Cypher Protocol Attack 

According to on-chain data, the hacker managed to steal approximately 38,500 SOL tokens and $123,184 USDC from the protocol’s liquidity pool. The hacker then transferred 30,000 USDC to a Binance account, raising suspicions about their possible affiliation with the exchange.

Cypher Program on Solana was hacked with losses of ~$1M. The program has been frozen.

The stolen funds are currently held at HHm4wK91XvL3hhEC4hQHo544rtvkaKohQPc59TvZeC71.

The attacker's initial funds are from @kucoincom and @binance. https://t.co/2TYEMsnuGy pic.twitter.com/JnNirDZaHW

— Beosin Alert (@BeosinAlert) August 8, 2023

The Cypher team attempted to contact the hacker via Twitter but received no response. However, they expressed hope that the hacker’s transfer to Binance was a mistake that could lead to their identification and recovery of the funds.

The Cypher Protocol is a project that aims to reward users for engaging with various platforms and services in the crypto space. Users can stake their tokens with Cypher and receive loyalty points that can be redeemed for rewards or airdrops.

The exploit had a negative impact on the protocol’s performance and reputation. The total value locked on Cypher dropped by more than 50%, from $1.2 million to under $510,000. Many users who staked their funds with Cypher hoping for an airdrop lost their money in the attack.

The incident also raised questions about the security of Solana-based projects and the risks of liquid staking pools. Some crypto experts warned traders not to stake their funds with projects offering airdrop rewards, as they could be vulnerable to exploits.

The Cypher Protocol exploit is not an isolated case in the crypto industry. Security breaches are common and can have serious consequences for investors and platforms alike. Therefore, crypto traders need to be aware of the security landscape of their investment platforms and exercise caution when dealing with new or untested projects.