Crypto Week: Rough Hacker Gets a Hefty Margin

Bitcoin continues to rest close to the important support level at $19,000. There are still no reasons for a rebound of the coin. Downside targets are intact as the nearest support is located at $15,000 with a possible rebound to $18,000. The mid-term downside targets are at $12,500 per coin. Any negative downside dynamics of Bitcoin would certainly impact altcoins that may lose more than 50% of their current prices with this scenario.

The unknown hacker has attacked Mango Markets DeFi protocol causing damages of $116 million. The attacker used several accounts, from one of which a collateral of 5 million USDC was funded. Straight after that, the hacker placed an order to sell 483 billion MNGO tokens. The second account was deposited with another collateral of 5 million USDC that was used to buy the designated number of tokens at $0.0328 per token.

The hacker then pumped the MNGO token prices to $0.91, making a profit of $423 million for the second account. This allowed the schemer to borrow $116 million from the protocol which became the bad debt of the latter account. MNGO prices dropped to $0.02 per token. The vulnerability stemmed from the thin liquidity on the exchange market between MNGO and the USDC stablecoin, which was used as the price reference for a MNGO perpetual swap.

What is more unusual is that the hacker voiced an offer to return a part of the funds while keeping $70 million as bounty to not be prosecuted with a criminal act. He initiated voting on the Mango Markets decentralised governance platform to support his proposition. He pointed out that the Mango Markets have the treasury designated in such a way that bad debts can be wiped out and all users can be paid back .

The Mango DAO that governs Mango Markets has agreed to pay the hacker $47 million without any further criminal prosecution of the schemer. Stolen funds are now being returned to the project. But the crypto public was pretty much confused with the decision of the governors not to continue with a criminal prosecution, although an internal investigation is already running. In fact, the confusion could be well understood as the schemer did not violate any laws by making collateral manipulations. Even the price manipulations he performed with the Mango Markets’ digital assets will not be legally prosecuted. After all, that was not a real hack as the schemer used protocol vulnerability without stealing any private information or getting illegal access to user accounts. Moreover, this is not the first an attempt to exploit collateral access and crate a bad debt on protocol’s heavily inflated trade balance has been carried out. A similar attack was made on Drift Trade project in May.

This story is another warning to crypto enthusiasts that are ready to explore deep crypto market waters dealing with dubious DeFi protocols. It is worthy to remember that the entire industry is very young and is still seeking further construction. So, hacks, even without violating the laws are a part of the crypto world. So, dealing with top digital assets might be a better idea to survive the current bearish crypto winter.