While projects cannot completely prevent bad actors from infiltrating the DeFi realm, security experts say there are ways to discourage such behaviour.
The rise of community-oriented blockchain security firms may make it more difficult for alleged bad actors to disappear without a trace.
CertiK issued a community alert early Wednesday regarding Flurry Finance, where its smart contracts were allegedly breached by hackers, resulting in the theft of $293,000 in funds. Shortly after the incident, CertiK published the alleged perpetrator’s wallet addresses, the address of the malicious token contract, and a PancakeSwap pair address allegedly involved in the attack, prompting BscScan to issue a warning. While the firm audited the smart contracts for the project, it appears that the exploit was caused by external dependencies.
Incident Analysis 👇
— CertiK Security Leaderboard (@CertiKCommunity) February 22, 2022
In another case, on Feb. 20, social media users reported that Atom Protocol, an Avalanche (AVAX)-based project, allegedly turned into a rug-pull hours after launch, with a screenshot from the project’s alleged Twitter account (now deleted) stating: ” “We can’t do anything because there is a problem/error in the contracts. As a result, we must terminate the project, our apologies.”
According to a report published on Tuesday, Assure DeFi, a verification company that provides know your customer, or KYC, checks on project developers and has one French national on file as the Atom Protocol contact. The firm performs such audits and then creates publicly accessible compliance content.
Assure DeFi explained to a media source that while knowing someone’s name, address, nationality, and so on is important, it does not prevent them from committing a crime. “It does, however, create an accountability path to pursue legal recourse against bad actors…which is the value that the Assure DeFi KYC Verification process provides,” Assure DeFi representatives explained.
According to the report, $87,440 was stolen as a result of the alleged rug pull, and the number of “injured parties” exceeds 1,000. According to Assure DeFi, victims are urged to contact Binance support and request that the alleged perpetrator’s wallet be frozen, as well as to contact French law enforcement authorities about the alleged crime.
We believe that many people are still misunderstanding the role of KYC/verification.
KYC is a deterrent and not a scam prevention and if anyone says otherwise they are misleading you.
The real value of KYC is having a validated real-world identity behind a project..
— Assure DeFi (@AssureDefi) February 20, 2022
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.