Polter Finance kicks off recovery efforts following $12m flash loan attack

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As a seasoned researcher with years of experience in the volatile world of cryptocurrencies and decentralized finance (DeFi), I find myself once again witnessing the double-edged sword that is innovation in the blockchain space. The recent incident involving Polter Finance, a platform that has shown promise, serves as a stark reminder of the challenges that lie ahead for DeFi projects.

As a crypto investor, I’m keeping a close eye on the situation with Polter Finance. They’re currently working tirelessly to recoup the $12 million that was stolen during a flash loan attack, which exploited a flaw in their oracle on the new SpookySwap market. It’s challenging times for them, but I admire their resilience and determination.

As per the recent announcement, Polter Finance has teamed up with the Security Alliance – an organization comprising ethical hackers and cybersecurity professionals specialized in tackling cryptocurrency-related risks – for the purpose of tracking down the perpetrator and swiftly recovering the funds that were compromised.

In addition to other actions, the DeFi protocol has reached out to the hacker through a message on the blockchain and proposed a reward for returning the stolen assets, while also agreeing not to take any legal action in this case.

Simultaneously, the anonymous founder of Polter Finance, known as Whichghost, submitted a police report in Singapore, claiming that the protocol suffered a loss of around 16.1 million Singaporean dollars (equivalent to about 11.98 million US dollars) during the cyber attack.

Whichghost also reported personal losses exceeding $223,000 in the incident.

As reported by cybersecurity company TenArarm, this event is an instance of “manipulation of price oracle data,” which refers to a situation where hackers tamper with the data sources, often called oracles, that decentralized finance (DeFi) systems rely on to establish asset values.

Here, the attacker took advantage of Polter Finance’s dependence on the actual price of the BOO token from SpookySwap, as identified by the blockchain security company BlockSec Phalcon.

By employing a flash loan, they manipulated the BOO token’s reserves within the WFTM-BOO liquidity pool, causing an artificial increase in its price. This price surge allowed them to secure significantly larger loans compared to the actual worth of their collateral.

Although Polter hasn’t released an official autopsy report clarifying the type of attack, investigations have led to the discovery that the stolen funds were transferred to wallets associated with the cryptocurrency exchange, Binance.

The native token of our platform, POLTER, has dropped more than 85% since the exploit was discovered. At this moment, the data provided by DefiLlama shows that the total value locked within the protocol has dramatically decreased from $9.77 million on November 16th to a mere $61,603 at the current press time.

In November, there’s been an abundance of issues with DeFi security, making it the third major exploit this month. According to crypto.news, the Thala protocol, which is based on Aptos, experienced a loss of over $25 million in assets from its liquidity pools due to a flaw in its farming contracts. Remarkably, despite the attack, the project successfully recovered nearly all of the funds after the hacker accepted a $300,000 reward.

Previously, on November 11th, another decentralized lending and borrowing platform named DeltaPrime suffered a theft of approximately $4.8 million in digital assets, similar to Polter Finance. Just like Polter Finance, they reached out to the hacker via an on-chain message in an attempt to recover all stolen property.

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2024-11-18 14:10