Jun 29 2022

Harmony blockchain loses nearly $100M due to hacked private keys

Category: Crypto,CryptograghyDISC @ 2:45 pm

Another day, another De-Fi (decentralised finance) attack.

This time, online smart contract company Harmony, which pitches itself as an “open and fast blockchain”, has been robbed of more than $80,000,000’s worth of Ether cryptocoins.

Surprisingly (or unsurprisingly, depending on your point of view), if visit Harmony’s website, you’ll probably end up totally unware of the massive loss that the business just suffered.

Even the business’s official blog, linked to from the website, doesn’t mention it.

The most recent blog article dates to the very start of 2022, and is entitled Lost Funds Investigation Report.

Unfortunately, those lost funds aren’t these lost funds.

Apparently, at the start of the year, those lost funds happened when five individuals were ripped off to the tune of just over 19 million of Harmony’s ONE tokens, then apparently worth about 25 US cents each.

Harmony made an offer, back on 04 January 2022, stating that:

We wish to provide the suspect an opportunity to communicate with the Harmony Foundation and return all funds. Harmony will not pursue further legal action or dox your identity so long as we receive your full cooperation. The team will offer you a bounty to reveal how this theft was performed so long as it can be validated.

We’re not sure whether it’s legal for a company to offer to rewrite history to pretend that an unauthorised and probably illegal hack was actually legitimate research, though it did seem to work in the infamous $600 million hack of Poly Networks.

The perpetrator in that case made a flurry of curious pseudo-political blockchain announcements ALL IN CAPS, written in artifically poor English, to claim that money wasn’t the motivator behind the crime.

Ultimately, after currying favour with the cracker by adopting the nickname Mr White Hat, Poly Networks (to many people’s astonishment, including our own) got most of their funds back.

We’re also not sure just how much insulation from prosecution any offer from the victim not to “press charges” is likely to provide, given that in many countries, it’s the state that usually takes the decision to investigate, charge and prosecute suspects for criminal offences.

Some countries, such as England, do give private individuals (including professional bodies or charities) the right to conduct a private prosecution if the state doesn’t want to do it, but they don’t give crime victims a “corollary right” to prevent the state from prosecuting a case if it does want to do so.

Nevertheless, Poly Networks’ unexpected success in recovering more than half-a-billion dollars has encouraged other cryptocurrency businesses to try this “wipe the slate clean” approach, presumably on the grounds that there’s often not much else they can do.

But it doesn’t seem to work terribly often.

It certainly didn’t seem to work for Harmony in January 2022, though if the perpetrator hasn’t yet been able to cash out their ill-gotten gains, they might regret not taking up the offer.

By 15 January 2022, when Harmony’s fake “bug bounty offer” expired, ONE tokens peaked at $0.35, but have since sunk to below 2.5 cents each, according to CoinGecko.

Cryptography for Secure Encryption

Tags: Cryptography for Secure Encryption, hacked private keys