Crypto Market Update
Crypto

Crypto Market: Enormous Hack Drains Solana Wallets

Solana, one of Ethereum’s top competitors, faced a wallet hack that resulted in over 7,000 hot wallets, including Phantom and others, drained of $SOL and $USDC. Anatoly Yakovenko, the CEO of Solana Labs, mentioned that the attack is assumed to be a “supply chain attack” on iOS-based wallets. 

What’s the Supply Chain Attack All About?

Supply chain attacks can be faced when malicious code gets injected into a system by entering and modifying the software. With the intention of delivering malicious payload or backdoor malware, these codes are inserted into the software.

In this case, it’s possible that the hacker attacked the iOS wallet libraries to extract private keys. The CEO also concluded that the attacked wallets didn’t interact with dApps of the ecosystem and remained inactive for quite some time.

Furthermore, the number of active addresses on the Solana network monthly has been declining since May 2022. For August, it has recorded the lowest number of 1.5Mn since the starting of the year.

What Happened?

Many users of the Solana ecosystem reported missing their capital from internet wallets such as Phanton and Slope.

The attack has affected users of both mobile wallets as well as those who use browser extensions. Although technicians are investigating the attack, the exact cause of the same nor the perpetrators have been found.

The hackers could have gained access to a reliable party service through a supply chain assault, allowing them to approve transactions, pretending to be the actual customers.

Both Phantom and Slope appear to be trying to sort out the issue to the best of their capability.

Phantom tweeted,

The Impact

It is not yet confirmed whether this hack affects only the Solana blockchain.

Due to its rapid transfers and affordable fees, Solana is fifth in line among the biggest blockchains when measured by the total value locked. It has gained recognition over the past year. In the time after the hack, SOL, the native token of Solana, fell by 4%.

The Solution

Solana reported that hardware wallets do not appear to be affected. They have revealed that the best course of action now is to shift the cash to a hardware wallet using a new seed phrase. The problem with this approach is that not everyone has a hardware wallet, a real gadget that provides greater safety for your cryptocurrency funds software wallets.

Engineers from various channels have discovered that the fault is not related to the core Solana code but rather to the code utilized by a number of software wallets.

The hack will unavoidably revive the age-old discussion about the safety of hot wallets, which are designed to give customers an easy method to transmit, hold, and acquire cryptocurrency yet remain online at all times.

Cold wallets, which are USB sticks that have to be connected to a computer to sign transactions, are hailed as a safer, although less practical, substitute.

Recovery Plan: In-process

The team at Solana has launched a survey for the impacted wallets wherein they have mentioned that their engineers are still investigating the root cause.

Earlier, the team also mentioned that with the help of several security firms, they investigated the matter across multiple blockchain networks. Later, they also encouraged users to use hardware wallets without the need for input of seed phrases. 

To avoid such scenarios, crypto investors and users need to rationalize the distribution of invested tokens within different wallets based on their security levels. Hardware wallets are not vulnerable to hacks as they don’t have internet connectivity, but the purchase cost is definitely more. Whereas hot wallets such as Phantom run through the internet and are prone to such hacks and outages.

Top Market Trends of the Week

  • After hitting Nomad’s cross-chain bridge with a $190 million attackWhite Hack hackers have so far given $9 million back to Nomad.
  • With the help of a partnership with Coinbase, Blackrock will now offer cryptocurrency investing, and the Coinbase platform now supports ETH staking. The announcements caused the price of $COIN to increase by 10%.
  • A US Senate Committee unveiled the Digital Commodities Consumer Protection Act. This year, it is the third bill to make the CFTC the principal regulator of cryptocurrencies.

Top 7-day Gainers

  • FLOW +53.7%
  • FIL +39.6%
  • CHZ +20.6%
  • CAKE +18.3%
  • VET +17.9%

Top 7-day Losers

  • DFI -15.1%
  • BCH -11.2%
  • ETC -10.3%
  • CRV -10.1%
  • XCN -8.7%

Bitcoin’s Technical Summary

Since June 18, Bitcoin has been rising above an ascending support line. The most recent validation of the line took place on July 26. On July 30, this caused a local high of $24,668.

During this time, an upward support line has also been followed by the daily RSI, which is still above 50. Bitcoin was able to break out of the $21,750 horizontal resistance area and a descending resistance line that had been in place since the end of March throughout the upward movement.

It hasn’t started a strong upward rise yet, though. Instead, since the breakout, it has been retracing. The ascending support line and a horizontal support region have formed a significant support level of around $21,750.

The trend’s direction cannot be determined by looking at the six-hour chart. First, an ascending parallel channel, which is frequently regarded as a bearish pattern, could be present in BTC’s price action. So the most likely situation would be a breakdown of the pattern eventually.

Altcoin’s Technical Summary

A rather quiet week for altcoins, with certain top-100 coins, headed by $FLOW, $FIL, and $CHZ, earning double-digit increases. In a short-term bearish move, the price of Ethereum ($ETH) dropped below the $1600 support level, while ApeCoin ($APE) is now accepted as payment at several Gucci outlets.

Final Thought

I hope you found this crypto market update useful!

Stay tuned for more information like this.


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