An attacker targeting the solana cryptocurrency ecosystem drained funds from thousands of wallets in an incident that could draw increased regulatory scrutiny to digital assets.
By 1 a.m. ET Wednesday, an unknown actor exploited a flaw to drain cryptocurrencies from 8,000 wallets where crypto holders store their funds, according to the Solana Foundation, a nonprofit that supports the network. The attack affected several wallet providers, including Slope and Phantom.
While the total value of the assets stolen was unclear, blockchain security firm PeckShield estimated the loss to be $8 million. The details of the attack were unknown.
Both wallet providers said on Twitter that they were working to fix the issue. “At this time, the team does not believe this is a Phantom-specific issue,” the company said. On both platforms, users reported losing their solana tokens and that of stablecoin USDC, whose value is pegged to the U.S. dollar.
“This does not appear to be a bug with Solana core code, but in software used by several wallets popular among Solana users,” said Austin Federa, a spokesman for Solana.
Solana’s popularity has surged in recent years, with supporters seeing it as faster and more energy efficient than the Ethereum or bitcoin blockchains, which can seize up during periods of heavy transaction volumes. The technology attracted $314 million in new funding last year, with Andreessen Horowitz, one of
Silicon Valley’s
most prominent venture-capital firms, leading the funding round.
A spokeswoman for Andreessen Horowitz didn’t immediately respond to a request for comment.
The Solana network has sought to lure more decentralized finance applications to the blockchain. Decentralized finance, or DeFi, aims to replicate functions of traditional finance, such as banking, insurance and exchanges.
Enthusiasm for the blockchain network has made its solana token the ninth-largest cryptocurrency by market value, according to CoinMarketCap. The value of solana fell 4% from the prior 24-hour period to $38.77 in early trading on Wednesday.
Solana’s attack follows one on another crypto protocol earlier this week. Nomad, which lets users swap tokens from one blockchain to another, lost millions of dollars in funds during the incident.
The attacks are likely to increase regulatory scrutiny around digital assets and DeFi. Securities and Exchange Commission Chairman
Gary Gensler
has said such projects aren’t immune to regulation. European Central Bank President
Christine Lagarde
called in June for new regulations over DeFi.
Treasury Secretary
Janet Yellen
called for the regulation of stablecoins after one collapsed earlier this year. Recent bankruptcies of other crypto firms have also bolstered calls for consumer protection.
Write to Caitlin Ostroff at [email protected]
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