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The crypto sector is still plagued by heists, with reports of significant sums being taken from companies that deal in digital currency coming out apparently monthly. Hackers, who previously focused their attacks on cryptocurrency exchanges, appear to have their sights set on Nomad to be the next target for hackers.
Bridges are the technical framework that enables users to transfer assets between several blockchains, the virtual ledger that powers the majority of today’s cryptocurrencies. When a bridge service exchanges one coin for another, it “wraps” the currency so that it will work on the other blockchain.
According to Tom Robinson, chief scientist at blockchain analysis company Elliptic, a wrapped coin does not completely change into another form of cash; rather, “it just appears like it,” he told CNN Business. Instead, a “token” is created to stand in for the new coin on the other network. “I put my Bitcoin on the bridge. I receive a Bitcoin token in return for doing that on the Ethereum blockchain, which I can then transfer across the Ethereum blockchain as a wrapped asset, “Robinson explains.”
Elliptic claims that because of these coin reserves, blockchain bridges are becoming popular targets for heists. “They are merely enormous honeypots.” “They simply possess vast quantities of cryptocurrency, making them very easy targets,” Robinson stated.
According to Elliptic, there have been bridge thefts totaling $1.83 billion so far, with the majority ($1.21 billion) occurring this year alone. Six significant bridges have been the target of thefts so far in 2022, including the California-based Harmony bridge, which lost $100 million in late June, and the Ronin bridge, owned by Axie Infinity, which lost $625 million in March.
According to blockchain security and data analytics firm Peckshield, in the most recent instance, hackers allegedly stole cryptocurrency worth $190 million from cryptocurrency bridge provider Nomad. (Nomad has not verified the total amount lost.)
In an effort to refund stolen money to users, Nomad is collaborating with chain analysis company TRM Labs, according to a tweet from Nomad on Wednesday.
As soon as the situation was reported, Nomad tweeted that it was “aware of impersonators acting as Nomad and offering bogus addresses to collect payments.”
Peckshield claimed that Nomad’s system was systematically shut down in pieces, and that stolen coins included ether and a few stablecoins pegged to the US dollar. The attack was described as “one of the most chaotic hacks that Web3 has ever seen,” according to a researcher at the cryptocurrency investment firm Paradigm.
Nomad hack leads to loss of confidence
A few days before the event, Nomad disclosed a number of illustrious investors who had contributed to a $22 million fundraising round in April to “help grow a security-first cross-chain messaging system,” including Coinbase Ventures, OpenSea, and Crypto.com Capital.
Concerns about security and confidence in the cryptocurrency business are only increased by the rise in bridge attacks. In the midst of a rise in cryptocurrency prices and usage, several of the worst crypto thefts ever occurred just last year. Despite a significant decline since then, cryptocurrency prices are still a potentially profitable investment.
According to a Federal Trade Commission report from June, cryptocurrency scams have also grown in popularity, with con artists stealing more than $1 billion from the beginning of 2021 through March of this year.
