Crypto hacks are getting more expensive

Hello and welcome to Protocol Fintech. This Tuesday: The Blockchain Security Arms Race, Jack vs. Vlad, and Coinbase vs. the SEC.

out of the chain

” You thirsty?” ” You furious‘No, this isn’t trash talk on Twitch; it’s a real Twitter conversation between Block CEO Jack Dorsey, 45, and Robinhood CEO Vlad Tenev, 35. Is it that we can’t all get along, and, I don’t know, look our age?

—Owen Thomas (E-mail | Twitter)

The target on the back of the crypto

Hackers and scammers have had a great time, striking on multiple fronts over the past few weeks. Online games, stablecoins, crypto wallets: nothing seems safe.

Even Elon Musk took notice. One of his complaints about Twitter is the prevalence of crypto scammers. The attacks underscore the vulnerability of DeFi and the complexity of securing decentralized blockchain operations.

Scammers exploit weak points and hit the jackpot. Willie Sutton maybe never said that he’s robbed banks “because that’s where the money is”, but that’s certainly a reason for recent hacks.

  • Hackers stole over $650 million in ether and stablecoins from the Axie Infinity breach. This attack shed light on sidechains, networks that connect blockchains, known to be vulnerable to hacking.
  • The Axie attack also highlighted how crypto scams are becoming a national security concern. The FBI said the attack was carried out by Lazarus Group and APT38, which are associated with North Korea. Experts believe that the money will fund North Korea’s weapons programs.
  • Hackers got away with over $180 million in stablecoins from Magic Bean Farms by manipulating network governance processes, according to William Callahan, director of government and strategic affairs at Blockchain Intelligence Group. The thieves used “flash loans,” which allow users to borrow tokens without collateral, and used them to gain the voting power that allowed them to drain funds, Callahan told Protocol.
  • Metamask also warned Apple device users that their wallet seed phrases could be exposed via automatic iCloud backups. Phishing scams look for users’ iCloud credentials.

Crypto hacks can be devastating for a DeFi project like Beanstalk. “There are no funds left,” a developer wrote on the project’s Discord chat server.

  • Breaches are not necessarily fatal for DeFi projects. Shortly after the hack, Axie Infinity owner Sky Mavis announced funding of $150 million round led by Binance.
  • “We know trust has to be earned,” Axie Infinity said. The VC money would surely come in handy to bolster its anti-piracy defenses.
  • Investors’ portfolios are not unlimited, however, and VCs cater to their limited partners. Can Sand Hill Road take on hackers backed by nation states?

This is good news for anyone who wants to fight bad guys for a living. Hiring is through the roof.

  • Cybersecurity and Blockchain are two big growth areas for tech jobs. Put them together and it’s a recruiting frenzy.
  • Ripple is recruiting security engineers. So is kraken. Circle wants someone who can assess the risks of third-party providers. Even a16z Crypto is hiring a security specialist to “harden” the business, including implementing “automated security detection and response capabilities across our entire infrastructure.”
  • But the biggest shortcoming may be in decentralized networks, where responsibility for security is distributed. If it’s everyone’s problem, it’s nobody’s problem.
  • The challenge is to stay ahead of hackers, who have plenty of resources and motivation to attack blockchain networks that move ever-increasing amounts of digital assets.

It is a security arms race. The protocols are generally open source, which means anyone can spot vulnerabilities. The community aspect of crypto projects leaves them open to social engineering. The challenge is to fix these vulnerabilities faster than they are exploited. Bad actors “learned to take advantage of bugs in code,” Callahan said. Sutton actually said he robs banks because he enjoys it. It’s time for crypto to spoil the hacker fun.

—Benjamin Pimentel (E-mail | Twitter)


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on the money

On protocol: Senator Elizabeth Warren, along with Representatives Katie Porter and Brad Sherman, accused TurboTax of defrauding consumers in a letter to the company, saying more tax filing services should be free.

Manchester City’s club chips, like many others, are proving disappointing. Reviews to pretend that fan tokens have little tangible benefit for fans, so people get tired of them pretty quickly.

DiDi is moving forward with its delisting plans in the United States. The Chinese carpooling giant has schedule a meeting of shareholders for May 23 to vote in favor of delisting from the New York Stock Exchange. The company, which has come under fire from Chinese regulators, said it would not apply to be listed on any other stock exchange before delisting.

Bank of America is increasingly going digital. The bank’s first-quarter earnings call showed that about 53% of its consumer sales came from digital channelsamounting to $1.7 billion, an increase of 4% compared to a year ago.

Andreessen Horowitz formalizes its Start program. Founders of startups in six categories can now apply for the program, with partners across multiple verticals, including fintech.


kraken Managing Director for Europe, Middle East and Africa Curtis Ting has a bone to pick with the scammers. “I am a former law enforcement officer myself, I also have two living grandparents. Frankly, there is a special place in hell for scammers and fraudsters who try to rob the vulnerable and seniors”, he said in an interview with the BBC.

the SECOND is “going beyond its authority under the Exchange Act by redefining [the word] to exchange,” mentioned Coinbase’s Paul Grewal. A proposed rule change could sweep DeFi systems, he noted, but does not address the impact on those markets.

Aspire Finance Creator Andre Cronje disappeared from the internet about a month ago. Now he’s back lamenting the state of crypto. “Crypto culture is made up of concepts such as wealth, entitlement, enrichment, and ego. The crypto culture has strangled the ethos of crypto,” he said in a blog post.

Blockchain Association head of politics Jake Chervinsky thinks the government might be crypto-friendly after counting its tax revenue. “Crypto is about to be the government’s favorite thing in the world after all those taxes are paid,” he tweeted.

Deal flow

Ava Labs raises $350 million at a $5.3 billion valuation. While investors in Round were not disclosed, previous investors in blockchain developer Avalanche include a16z and Polychain Capital.

Genies raised $150 million, bringing its valuation to $1 billion. The NFT avatar company last round of funding was led by Silver Lake, a decision by the investment company to make its way into the Web3 sphere.

BloXroute has raised $70 million. The crypto company round series B was led by SoftBank Vision Fund 2, with participation from Dragonfly Capital, ParaFi Capital, Lightspeed Venture Partners and others.

Stark Bank raised $45 million. The challenger bank round series B was led by Ribbit Capital, with participation from Bezos Expeditions; Capital SEA; executives from Airbnb, Coinbase and Visa; and others.

PolySign has acquired digital asset fund administrator MG Stover. Polysign will also carry out a round C series alongside the acquisition, with the participation of new investors Soros Fund Management, Brevan Howard and GSR.

Bread Financial launched the American Express Bread Cashback credit card. The card joins the other cards of the financial services company payment solutionsbread payment and bread saving.

FIS has partnered with Fireblocks to accelerate crypto adoption. the Partnership will allow businesses to access crypto trading platforms, liquidity providers, lending bureaus and decentralized financial applications.


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Thanks for reading – see you tomorrow!

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