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The crypto market is still plagued by heists; it seems like every month, news of significant sums being taken from companies dealing in digital currency is reported. Hackers now seem to be focusing their attacks on blockchain bridges like Nomad rather than the previously popular target of crypto exchanges.
Bridges are the technical framework that enables users to transfer assets between various blockchains, the virtual ledger that powers most of the world’s main cryptocurrencies. A bridge service that exchanges coins “wraps” the currency so that it can operate on the other blockchain when it exchanges one coin for another.
Tom Robinson, the chief scientist at blockchain analysis company Elliptic, told CNN Business that a wrapped coin does not actually change into another type of cash; rather, “it just looks like it.” To represent the new coin on the alternative blockchain, a “token” is instead created. “In the bridge, I placed my Bitcoin.” I receive a Bitcoin token in exchange for executing that on the Ethereum network, which I can then transfer through the Ethereum blockchain as a wrapped asset, “Robinson clarifies.”
As a result, blockchain bridges are becoming popular targets for heists as a result of these coin reserves catching hackers’ attention. “Just gigantic honeypots, that’s all. “They are simply very obvious targets since they handle enormous sums of cryptocurrency,” Robinson remarked.
According to Elliptic, bridges have been the victims of thefts totaling $1.83 billion, the majority ($1.21 billion) of which have occurred this year. Since the beginning of 2022, six significant bridges have been the target of thefts, including the California-based Harmony company’s Ronin bridge, which lost $625 million in March, and the $100 million-lost Harmony in late June.
According to blockchain security and data analytics company Peckshield, the most recent incidents included hackers allegedly stealing cryptocurrency worth $190 million from cryptocurrency bridge provider Nomad. The precise amount lost has not been verified by Nomad.
According to a tweet published by Nomad on Wednesday, the company is collaborating with chain analysis company TRM Labs to assist in the tracing of cash in an effort to give users their stolen money back.
Late on Monday, Nomad posted a tweet in response to the event warning that “impersonators acting as Nomad and offering bogus addresses to collect payments” had been reported.
The system of Nomad, according to Peckshield, was steadily depleted in batches, and among the stolen coins were certain stablecoins pegged to the US dollar as well as ether. The attack was described as “one of the most chaotic hacks that Web3 has ever seen,” according to a researcher at the crypto investing firm Paradigm.
Nomad hack: Security concerns mount for crypto businesses
Just a few days before the event, Nomad highlighted 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 solution,” including Coinbase Ventures, OpenSea, and Crypto.com Capital.
Security and trust worries in the cryptocurrency business are only increased by the rise in bridge attacks. Just last year, as the price and usage of cryptocurrencies increased, several of the worst crypto thefts ever occurred. Despite a recent sharp decline in price, cryptocurrencies are still a potentially profitable investment.
According to a Federal Trade Commission report from June, crypto scams have also grown in popularity, with con artists stealing more than $1 billion from the beginning of 2021 through March of this year.