A Week Later, Investors Remain Unfazed by DeFi’s Largest Crypto Hack

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As massive computer theft goes, last week’s hack of the Poly Network was about as benign as they come — even though the thieves stole more than $600 million in cryptocurrency.

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As Reuters reported on Monday, within days of the heist, the DeFi, for decentralized finance, platform said the “white hat” hacker or hackers had returned nearly all the money they stole.

Meanwhile, crypto investors seem to have shrugged off the news, as evidenced by the fact that over the weekend, the price of Bitcoin reached its highest level in three months, CNBC reported, while the overall crypto market moved back above $2 trillion for the first time since mid-May.

Last Tuesday’s breach of the Poly Network represented the biggest DeFi hack in history, according to the Blockworks website. The hackers broke into Poly Network on the DeFi exchanges Polygon, Ethereum and Binance Smart Chain. Poly Network is a cross-chain protocol. As Blockworks noted, a cross-chain protocol acts as a bridge by connecting different blockchains and enabling transfers between protocols.

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Although the hack got plenty of headlines — coming as it did during a period that has seen the crypto market decline amid greater regulatory scrutiny — some market watchers downplayed its impact on investors. In fact, it might even serve as a wake-up call.

“Those who have allocated to the crypto landscape for a while are very numb to these exploits,” Imran Khan, lead at the DeFi Alliance, told Blockworks. “We’re still very early, and these economic hacks are essentially ways to improve the overall ecosystem over a long period of time.”

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Daniel Matuszewski, co-founder of CMS Holdings, had a more cautious take, telling Blockworks that while he doesn’t think anybody cares about the hack, “it’s not good and it’s going to obviously lead to people being more cautious. But here’s the reality of it, it’s a pretty risky section of a risky chunk of our industry. It’s a cross-chain product. These are the riskiest of the risky places.”

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And as Reuters noted, the Poly Network heist underscored how vulnerable DeFi sites are to crime, mainly because hackers can exploit bugs in the open-source code used by sites.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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