As a seasoned crypto investor with several years of experience under my belt, I’ve seen my fair share of hacks and breaches in the decentralized finance (DeFi) space. However, the recent LI.FI hack left me feeling a mix of disappointment, frustration, and relief.
A few days ago, LI.FI, an API linking multiple blockchains to facilitate asset transfer between them for use in DeFi platforms and other applications, was unfortunately hacked. The intrusion resulted in a theft of approximately $11.6 million from the protocol. LI.FI has since shared details with its community regarding this incident.
After introducing a new smart contract feature, LI.FI encountered an attack. The company explained in their blog that “this newly added facet contained a vulnerability, which gave an intruder unauthorized access to self-custodial wallets of users who had granted infinite approval for LI.FI’s contract.”
Individuals utilizing Ethereum and Arbitrum with the “unlimited approval” feature activated experienced a security vulnerability that resulted in drained assets. Those without this setting were not impacted. Among the affected digital currencies were stablecoins such as USDT, USDC, and DAI.
Approximately 153 wallets were impacted, and LI.FI has proactively arranged for full reimbursement of the affected users’ losses. According to a recent Reddit post, their team will begin reaching out to users starting the following day with information regarding this compensation plan they are developing. Additionally, they have stated that they, along with their significant investors, are putting in maximum effort to implement a 100% loss coverage compensation scheme.
After LI.FI reportedly managed to contain the hack and secure its system following the unfortunate incident, they promptly notified the relevant law enforcement agencies in order to apprehend the individuals behind the $11.6 million theft.
“LI.FI’s X account reported that the protocol has been restored to its full function. Bridging and swapping on the majority of collaborating protocols are once again active. We remain in contact with law enforcement agencies and industry stakeholders to locate and retrieve stolen funds.”
LI.FI acknowledged the need for enhanced security and plans to implement various measures to fortify its platform against cyber threats. Additionally, they will revise their contract deployment process in light of the recent mishap, which was attributed to human error.
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2024-07-19 18:25