Solana’s crypto pockets, Nomad, has been hacked, with losses within the tens of thousands and thousands

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A pair of crypto hacks worth nearly $200 million in losses and likely affecting more than 10,000 users have sparked concern in an industry already shaken by falling prices.

On Wednesday, Solana, a popular blockchain and token, said that several wallets holding its assets had been breached. It is believed that at least 7,700 such wallets will be affected, the company said, although a London-based blockchain-analytics firm Elliptical put the stolen amount at $5.2 million in crypto, including Solana tokens and the stablecoin known as USD.

“An exploit allowed a malicious actor to drain funds from several wallets on Solana,” the company said said via Twitter. “Engineers are currently working with multiple security researchers and ecosystem teams to identify the root cause of the exploit, which is currently unknown.”

The hack is believed to have taken hold of wallets such as Fana and Phantom. These are “hot wallets” – that is, wallets that allow lightning fast transactions because they are always connected to the internet, as opposed to “cold wallets,” which usually require a USB drive and have long periods of disconnection at them. Solana – was at the time one the fifth most popular sign before slide – has made a name for itself as a blockchain that can transfer funds very quickly.

The news follows Monday’s revelation from Nomad, a so-called blockchain bridge, that it admitted that around $190 million was taken from it after an hacker hacked its system. The attack was called a “free-for-all” because the hacker’s original code allowed anyone to copy it and steal the crypto for themselves. It is not known where the money went.

Nomad said its executives were working with law enforcement and a blockchain data firm called TRM Labs to track down the funds, with no update as of Wednesday afternoon. They said they were working on “investigation/remediation” as well as “technical fixes”.

In an unusual move, the company early Wednesday provided an address to anyone who might have been selected to receive the money in an act of noble protection.

“White hat hackers and friends of ethical researchers who have been protecting ETH/ERC-20 tokens, send the funds to the following wallet address on ethereum,” he said on Twitter. It is not known if any good Samaritans took the company up on its offer.

A blockchain bridge allows consumers to exchange crypto from one blockchain to another — say, from bitcoin to ethereum — making it vulnerable to what security experts call “both sides,” weaknesses on either blockchain. These bridges are usually newer and, in some cases, more quickly designed. In March, another blockchain bridge called Ronin was hacked for amounts totaling more than $600 million in crypto.

“To date, approximately $1.8 billion has been stolen from these services and it is concerning that their security standards do not seem to match the huge amounts of capital that are being entrusted to them,” Tom Robinson, co-founder and chief company scientist. Ellipticalsaid in an email to The Washington Post, referring to bridges.

Meanwhile, Solana’s case has caused concern because he was vulnerable due to factors beyond his control. While some argue that the hack doesn’t indicate that any of the industry’s foundations are shaky – “This wasn’t a core blockchain problem, it was probably one app that someone built that was buggy,” crypto mogul Sam Bankman- Fried Fortune said Wednesday — pointed out to critics the interconnectedness of crypto networks and the inability of any part to fully check all the others.

While the hacks involved isolated entities, blockchain bridges and hot wallets also emphasize what many crypto enthusiasts say is so appealing about the form: ease of use. The next one allows different blockchains to be communicated – which may be as necessary for a future era of technology where, say, people with AT&T and Verizon phone plans can talk to each other as in an earlier era .

And cold storage, while safer, would seem to remove what is at the heart of crypto’s appeal, which is allowing transfers without delay and waiting for traditional bank transactions.

On social media on Wednesday, many showed images of their wallets showing zero balances, while others questioned hot wallets. “So you’re telling me storing my entire net worth on a google chrome extension is a bad idea?” one wag write of Phantom.

But experts say the issue could be more serious than that. Finding solutions, they note, may mean making sacrifices within the goals envisioned by crypto ideals.

“One of the benefits of opening up the banking system this way is the speed and lower barrier to transactions,” said William Callahan III, a former Drug Enforcement Administration special agent who now serves as director of government and strategic affairs for a company called the. Blockchain Information Group. “But what these hacks show is that we need to take a step back and question that idea of ​​accessibility, since speed is also part of the problem. We have to balance speed with security.”

Still, Callahan said, he believed such an arrangement could be worked out. “Blockchain bridges need to increase their protection, and consumers may need to use more cold storage,” he said.

The need for speed may be diminishing on its own as some people leave cryptocurrency. Bitcoin, a strong barometer of crypto activity, lost 50 percent of its value in 2022 as investors lost the asset, although it has seen a rebound from its sub-$19,000 price in June to around $23,000 in recent weeks.

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