Echo Protocol Hack Sparks $76M Panic After Hacker Mints Fake eBTC and Drains ETH

Key Takeaways:

• A fake eBTC with an estimated value of $76.6 million reportedly caused the theft of the tokens via Echo Protocol.
• In the past, the hacker already stole 385 ETH and transferred a portion of it via Tornado Cash.
• This incident follows the THORChain and Verus bridge hacks and becomes the third big DeFi exploit in just four days.

Another major DeFi exploit has shaken the crypto market as Echo Protocol became the latest target in a growing wave of cross-chain and smart contract attacks. The exploit surfaced just days after hackers drained more than $21 million combined from THORChain and the Verus-Ethereum Bridge.

According to blockchain analytics firm Lookonchain, the hacker managed to illegally mint 1,000 eBTC, which led to the exploitation of Echo Protocol. The mints’ assets, measured at current prices, are worth approximately $76.64 million.

The security researchers’ onchain data shows that the bad guy promptly started to get the real tokens out of the protocol using the fake collateral. The current loss of the wallet is about 385 ETH (valued at approximately $821,000).

The intruder seems to still be on top of a considerable volume of the newly minted eBTC, meaning he may still be able to withdraw more if he is unable to be contained in the exploit. Lookonchain pointed out the criticality of the situation, this has now been the third major crypto exploit in just four days.

The researchers dubiously suspect the exploit is similar to attacks on other DeFi lending platforms.

Early indications are that some of the newly created eBTC were deposited as collateral, and then the rest was taken out as a loan on the platform. Some of the stolen funds were reportedly bridged to Ethereum and swapped into ETH.

Additionally, the researchers tracked the movement associated with the “Tornado Cash” crypto-mixing service, which is frequently adopted to hide traces of transactions following exploits.

This is another stark example of the liabilities of DeFi protocols where the collateral validation and cross-chain asset verification are highly dependent. Once the hackers succeed in minting or hacking those wrapped assets, they can access real liquidity pools without investing too much money at first.

This is one of the many known hacks of DeFi protocols this year.

It suffered from one of those exploits on May 15 that’s said to have cost over $10 million. The Verus-Ethereum (ETH) Bridge has suffered about $11.5 million out of the wallet three days later after vulnerabilities related to cross-chain validation logic were exploited.

The latest attack brings combined losses from the three attacks just over $98 million in less than a week of attacks.

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