Binance Halts Trading of Hacked DeFi Project Cover Protocol, Token Crashes

DeFi project Cover Protocol becomes the latest project to be attacked by the hacker. The person behind the recent attack exploited the Blacksmith Farming contract of the project to mint infinite Cover tokens. The price of Cover Protocol’s token crashed as much as 98% following the hacking news.

According to the official details mentioned by the company, the Cover Protocol team requested Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers to stop services. Following the news, Binance stopped trading of the Cover token as the price crashed from $920 to as low as $24. “Due to a significant exploit found in the COVER smart contract, Binance will suspend trading for all COVER trading pairs to protect Binance trading users. We will provide an update in a further announcement shortly. Please note that COVER deposits have been suspended. COVER withdrawals will remain open,” Binance mentioned in the official announcement.

“The Blacksmith farming contract has been exploited to mint infinite COVER tokens. We have restricted minting access to the farming contract in order to stop the attacker. If you are providing liquidity for COVER token (uniswap or sushiswap) please remove it immediately,” the Cover Protocol team mentioned in an announcement.

Nansen, a company that analyzes 50M+ labeled Ethereum wallets, mentioned that the attacker minted for about 2 hours and then dumped via 1inc.exchange. Additionally, Nansen mentioned that 100% of tokens came from minting.

DeFi Vulnerability

In recent months, the crypto community has seen several hacking attempts from rogue actors around the world. Finance Magnates earlier reported about a surge in the use of privacy wallets by hackers to hide stolen crypto assets like Bitcoin. Hackers started targeting Defi projects recently by exploiting vulnerabilities in the technical structure. Earlier this month, hackers attacked the private wallet of the Founder of DeFi project Nexus Mutual, Hugh Karp, and stole nearly $8 million.

“On 14 December, Hugh Karp's personal address was attacked and drained by a member of the mutual. Only Hugh’s address was affected in this targeted attack, and there is no subsequent risk to Nexus Mutual or any members,” Nexus Mutual mentioned in a tweet.