The company is ready to file charges against the thief for stealing over $9 million
Decentralized exchange dYdX announced that it had discovered the identity of the hacker responsible for a v3 platform attack on November 17, 2023, resulting in $9 million being stolen from its insurance fund. As a result of the revelation, dYdX confirmed that it is currently examining taking legal action against the person responsible for the ‘targeted attack’ on the exchange.
In analyzing the attack, dYdX saw that the hacker initiated multiple 5x leveraged long positions utilizing the YFI/USD trading pair in more than 100 wallets. The attacker then purchased spot Yearn.finance tokens using various addresses, which led the price to increase by 215%.
1/ After looking into the YFI incident on dYdX v3, we’ve successfully tracked down the individual responsible & made a report to law enforcement.
This is our in-depth analysis & next steps 🧵https://t.co/JGxebpERYl
— dYdX (@dYdX) January 3, 2024
According to dYdX, the attacker increased their potential profits by entering more YFI/USD positions to reach a maximum of about $50 million. The platform increased the initial margin prerequisite and reduced the sizes of base and incremental positions in the YFI/USD market on November 17 to restrict the attacker’s actions.
The following day, YFI’s price fell by almost 30% within an hour, and the attacker was unsuccessful in closing their positions. Losses were automatically covered by the insurance fund after the hacker’s holdings shifted negatively, according to dYdX.
The exchange also noted that a week prior to the YFI incident, the attacker employed the same strategy on SUSHI/USD, earning them a profit of about $5 million. However, the v3 insurance fund wasn’t affected because dYdX had increased its initial margin requirement to 100%, deterring the attacker from additional gains.
To thwart future coordinated attacks using similar methods, dYdX expressed it has enhanced its v3 trading platform to boost alerts and open-interest monitoring. The exchange says that the enhanced v4 chain is expressly built to reduce these types of risks. It contains a new feature that automatically modifies the initial margin fraction in reaction to irregular price changes.
