The $566 million hack of the BNB chain: the major attack on the Binance network bridge is deconstructed.

The BNB Channel team temporarily shut down the network in response to the attack, which speaks volumes about the network’s centralization issues.

BNB channel targeted

Last night’s nine-digit hack on the BNB Chain bridge has caused quite a stir in the crypto-currency community.

An attacker targeted the blockchain network run by Binance last Thursday, managing to grab about $110 million in crypto currency. But while $110 million is a pretty hefty sum for a few hours work, it’s only a fraction of the overall size of the hack. On-chain data shows that the attacker began this elaborate hack by tricking BNB Chain’s BSC Token Hub bridge into sending it two million BNB tokens worth about $566 million. According to Paradigm’s researcher samczsun The attacker used a complex multi-step process to exploit a bug in the bridge, forging the bridge’s code so that he could make two separate withdrawals of one million BNB. The bridge sent the funds and continued to operate normally until several community members raised doubts about the size of the withdrawals. The BNB chain responded by shutting down the blockchain.

Bridge faults exposed

The incident has garnered attention in the crypto space in part due to the sheer size of the hack. While the hacker’s revenue is currently around $110 million, the theft of two million BNB puts the incident on par with other major attacks, such as the $552 million hack of Axie Infinity’s Ronin Bridge in March. Once again, the BNB Chain hack has raised the alarm about the security risks of cross-chain bridges. With the evolution of crypto-currency and the emergence of various Tier 1 networks alongside Ethereum (BNB Chain is essentially an Ethereum clone), the demand for cross-chain interoperability has skyrocketed. This has created an opportunity for bridges like BNB Chain’s product to meet market needs. Per Defi Llama’s data, the total value locked in crypto bridges now exceeds $10 billion, thanks to the surge of BNB Chain and other networks in 2021.

While bridges are useful for connecting blockchains, they are generally considered less secure than core layer networks like Bitcoin and Ethereum, as they often use a central storage point to lock down deposited assets. This has led to an upsurge in hacks; an August report from Chainalysis found that bridge hacks account for 69 percent of all cryptocurrency thefts, with proceeds exceeding $2 billion to date.

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While hackers typically use a variety of methods to steal funds, they usually manage to execute their attacks by exploiting faulty code. The BNB chain hack is no different: the attacker found a way to forge evidence so they could make two fraudulent withdrawals. They quickly routed the funds to different locations, meaning that a significant portion of the stolen funds were already in motion when the BNB Chain team decided to shut down the network.

Tracking the attacker’s movements

Perhaps the most curious element of this hack is the activity of the attacker after the exploit itself. Given the size of the loot, the hacker faced limitations in his money laundering options – simply because big pots like this tend to attract more attention from cryptocurrencies, blockchain investigators and authorities. On-chain data shows that the hacker moved his funds to multiple locations, but he took an innovative approach that differs from most other similar thefts.

As the Treasury Department noted when it banned Tornado Cash in August, hackers frequently turn to crypto blenders to siphon off stolen funds. While the hackers could have made a similar maneuver to cover their tracks, they chose to deposit the funds in a bank account. just under half of the proceeds in Venus Protocol, a loan product on BNB Chain. This may be because they would have had difficulty redeeming all of their BNB tokens without impacting the price; Tornado Cash accepts deposits in euros. ETH, DAI, cDAI, USDC and USDT.This means they would have had to trade their assets and switch to Ethereum to use it.

By providing BNB as collateral on Venus, the hacker was able to borrow about $150 million in stablecoins. It’s an interesting play because they borrowed USDT, USDC and BUSD – centralized stablecoins that can be frozen by their issuers. Tether blacklisted at least $6.5 million of the loot, preventing the hacker from cashing in on the USDT he borrowed. The hacker used several strategies to deploy his funds on other networks, converting much of the loot into ETH.

SlowMist, blockchain security company estimates that the hacker moved about $110 million from BNB Chain to six other Ethereum-enabled networks – Ethereum, Polygon, Fantom, Avalanche, Arbitrum and Optimism. However, most of the transferred funds have not yet been laundered, and the hacker has left the BNB Chain network. most of the proceeds on BNB Chain. For such a sophisticated attack, they left a huge amount of money on the table since the stolen BNBs could be frozen.

BNB took a hit as a result of the incident and is down about 3.5% today. Besides BNB, the hacker’s largest position is ETH – he currently has over $32.5 million in his account. this portfolio.

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The BNB chain responds

The BNB Chain team reacted to the incident as the attack was circulating on Crypto Twitter. The official Twitter account of the blockchain confirmed at 22:19 UTC that she had paused the network, noting that she had identified a “potential hack“. Some applauded the team for its response, including Binance CEO Changpeng “CZ” Zhao. stated: that he was “impressed by the speed of action of the company’s team“. However, the decision to shut down the blockchain has also prompted many to decry the centralized design of the blockchain. “You are supposed to be immutable Fren,tweeted The DeFi Stacks Bitcoin project. Other posted memes from CZ to imply that he had complete control over the network validators.

Immutability is considered a key feature of blockchain and crypto-currency technology, but controlled network shutdowns expose centralization issues that throw this idea out the window. When a blockchain can be shut down, it is not immutable. The largest blockchain, Bitcoin, has never been shut down since its launch in 2009. Bitcoin has more than 10,000 complete validation nodes worldwide, while Ethereum has just over 8,000. Like BNB Chain, Ethereum uses a Proof-of-Stake mechanism with over 400,000 validators securing the network. BNB Chain, on the other hand, has only 44 validators. On a statement the BNB Chain team said that “decentralized chains are not designed to be stopped“, adding that contacting all 26 active validators on the network prevented further damage.

BNB Chain was able to restart the network after synchronizing validators early Friday, and the network is now operating normally with the hacker’s wallet blacklisted. Questions remain about the future of BNB and the stable currencies centralized on BNB Chain, currently valued at more than $426 million (the hacker still has $254 million in BNB collateral versus $147 million in stable currencies on Venus). Due to the scale of the attack, it is likely that the authorities will soon be involved as well.

The BNB channel statement says it is up to the community to decide whether to freeze the hacked funds.”for the common good of BNB“. It also offers a 10% bonus of recovered funds for finding the hacker. The BNB chain took responsibility for the incident in its note. “We would like to apologize to the community for the exploit that occurred. We are responsible for it“, the note reads.

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