solana: Solana wallets compromised for multi-million hack, resparks the wallet debate

Synopsis

The attacker somehow obtained the ability to sign (initiate and approve) transactions on the behalf of users, suggesting a trusted third-party service may have been compromised in a so-called supply chain attack.Following the hack, Solana plunged about 10 per cent to $38.28 level on Wednesday. However, the volumes rose 75 per cent as the tokens worth $1.91 billion exchanged hands in the last 24 hours, the coinmarketcap data suggested.

Spotlight WireOnce referred as ‘Ethereum Killer’ by the crypto fanatics, Solana has been hit hard in the latest crypto winter. However, the blockchain network is buzzing over its latest ecosystem exploit which has wiped off tokens worth millions.

Users have reported that their funds have been drained out without their knowledge and the latest hack has been on the ‘hot’ wallets which are connected to the internet including Phantom, Slope and TrustWallet.

The attacker somehow obtained the ability to sign (initiate and approve) transactions on the behalf of users, suggesting a trusted third-party service may have been compromised in a so-called supply chain attack.

Following the hack, Solana plunged about 10 per cent to $38.28 level on Wednesday. However, the volumes rose 75 per cent as the tokens worth $1.91 billion exchanged hands in the last 24 hours, the coinmarketcap data suggested.

However, the quantum of drained funds is not confirmed yet and it is reported the attack is not over either. Several addresses linked to Solana have been attacked.

Sathvik Vishwanath Co-Founder, CEO Unocoin said that Solana is a blockchain with its own token, that works as the gas to confirm the transactions on that blockchain, witnessing numerous hack attempts on the wallets supporting this token.

“A recent successful attempt drained away about $560 million worth of Solana from various user wallets and this has sent shivers in the Solana ecosystem” he added. “A part of the reaction is the decreased prices of the token.”

According to experts, this is an opportunity to also remind investors to access the health of the crypto ecosystem. Solana has faced outage issues in the past.

The initial signals point to compromised keys which are evident by the digital footprints which are apparently signed by the respective owners, said Prashant Kumar, Founder, weTrade.

“Solana and the other cryptocurrencies have been generally moving upward for last few weeks. However the hacking news led to price erosion first but it has partly restored the lost value since then,” he added.

Market participants said it’s unfortunate that Solana’s ecosystem is breached and the exact reason is yet now known. It is speculated that the compromise is at the end of a third-party service provider.

Vikram Subburaj, CEO, Giottus Crypto Platform said that 8,000 wallets have been compromised from internet-connected hot wallets and the attacker seems to have wrongfully secured the mandate to ‘initiate and approve’ transactions.The latest attack has reignited the long running around the security of hot wallets, which stay connected to the internet at all times in order to provide users a convenient way to send, store, and receive crypto.

Cold wallets – USB drives that must be plugged into a computer to sign transactions – are heralded as a more secure, albeit less convenient, alternative.

This brings to fore the question regarding the security of the ‘perpetually-connected-to-the-internet’ hot wallets which allow easier ways to send, receive and transact crypto, said Subburaj.

“The prudent thing for customers, investors, and traders would be to switch to trusted exchanges which provide additional, multiple layers of safety. They could also use hard wallets and avoid using third-party wallets,” he added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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    Updated: 08/03/2022 — 11:00

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