Cryptohack Update: SwissBorg Faces $41M Exploit

In a weekly summary by Information Security Media Group, notable cybersecurity events have emerged including a $41 million hack of SwissBorg, the utilization of Ethereum smart contracts to mask malicious npm code, U.S. sanctions on Southeast Asian cybercrime networks, and significant sentences for individuals involved in digital asset laundering.

SwissBorg, a cryptocurrency platform based in Switzerland, has reported a loss of approximately $41 million in Solana tokens following a recent security breach linked to its partner’s API. The incident did not directly compromise the app but rather exploited vulnerabilities in the partner system. A blockchain analyst indicated that the loss totaled $41.3 million. To address the situation, SwissBorg plans to utilize its SOL treasury to reimburse affected users and is collaborating with white-hat hackers and cybersecurity firms to retrieve the lost funds.

Cybercriminals are increasingly leveraging Ethereum smart contracts to obscure command-and-control instructions embedded within malicious npm packages. Researchers from ReversingLabs have identified this tactic in two specific packages, colortoolsv2 and its clone, mimelib2. Rather than embedding malicious links directly, the packages fetch command and control URLs from blockchain contracts, making detection challenging. Attackers have even established counterfeit cryptocurrency-themed GitHub repositories to deceive developers into incorporating their malicious packages.

The U.S. Department of Treasury has sanctioned 19 entities linked to extensive cryptocurrency scams in Southeast Asia, impacting various groups in Myanmar and Cambodia. Authorities indicated that these networks have defrauded countless Americans and forced individuals into modern slavery through deceptive job offers and threats. The sanctions will freeze all U.S.-linked assets belonging to these organizations, reflecting ongoing concerns about financial security and human rights abuses within this emerging criminal landscape.

A federal court in California has imposed a prison sentence exceeding four years on Shengsheng He, who was found guilty of laundering nearly $37 million derived from a fraudulent cryptocurrency investment scheme based in Cambodia. He is also liable for $26.8 million in restitution after having co-owned a shell company that facilitated the routing of funds from victims overseas. Prosecutors underscored the involvement of co-conspirators in deploying various communication channels to lure victims into this elaborate scam.

The Ethereum Layer 2 platform Kinto is set to shut down on September 30 after suffering a $1.55 million exploit that compromised its lending pools. The attack exploited a vulnerability in a smart contract, leading to a significant crash in the platform’s token value. Despite efforts to recover through a recovery initiative known as “Phoenix,” financial pressures proved unsustainable, compelling the founder to announce the decision to wind down operations.

Venus Protocol has successfully reimbursed $11.4 million to Eureka Trading’s CEO, Kuan Sun, following a phishing incident in which Sun unknowingly executed a malicious transaction through a counterfeit platform. Although Venus was not directly breached, it acted swiftly to investigate and confirm system integrity, enabling the recovery of funds with the aid of on-chain security experts.

Nemo Protocol reported a $2.4 million exploit that drained stablecoins from its market pool. The breach was initially detected by security experts, and while investigations continue, the team assures that vault assets remain secure. The attack occurred during a scheduled maintenance period, raising questions about the platform’s security protocols and system integrity.

The Department of Justice has filed a civil forfeiture action to retrieve more than $5 million in bitcoin associated with SIM swap attacks that occurred between October 2022 and March 2023. Attackers are believed to have manipulated mobile carrier systems to gain access to victims’ accounts, draining their cryptocurrency wallets. The investigation highlights the ongoing risks associated with SIM swapping as a method of financial exploitation.

Christine Lagarde, President of the European Central Bank, has emphasized the need for stricter regulations governing non-EU stablecoin issuers to mitigate risks inherent in the cryptocurrency market. Highlighting regulatory gaps, she called for all firms operating within the EU to adhere to the same reserve requirements as EU-based companies, thus ensuring financial stability and investor protection in the rapidly evolving crypto landscape.

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have announced a joint roundtable scheduled for September 29, aimed at clarifying the regulatory framework surrounding cryptocurrency markets. The agencies intend to align rules related to various crypto products, enhancing the overall security and transparency of the market amid growing concerns about investor protection and market integrity.