Jump Crypto Fronts $325 Million In Stolen Crypto One Day After Solana’s Biggest Hack Ever

TOPLINE

Digital assets firm Jump Crypto said Thursday it replaced the $325 million worth of tokens allegedly stolen from its portfolio company Wormhole Portal, a platform that helps users transfer cryptocurrency between the Solana and Ethereum blockchains, in one of the biggest hacks ever to hit the booming—and largely unregulated—decentralized finance space.

KEY FACTS

Jump Crypto, the cryptocurrency-focused investment arm of quant trading firm Jump Trading, which has raised more than $700 million in capital, tweeted Thursday afternoon that it had “replaced” 120,000 stolen Ethereum-based tokens “to make community members whole” and support Wormhole but provided no further details about the bailout.

Jump’s tweet came hours after blockchain platform Wormhole, which launched last August and holds roughly $1 billion in deposited funds, confirmed on Twitter that funds involved in the hack had been “restored,” and said on Telegram that “all funds are safe.”

Wormhole previously notified users of a possible hack on Twitter at about 4 p.m. ET Wednesday, saying its network was down for maintenance as the firm looked into a potential attack.

About an hour later, Wormhole said its network had been exploited and claimed about 120,000 tokens of a cryptocurrency known as wrapped ether, which tracks the value of the world’s second-largest cryptocurrency, ether, had been stolen—representing some $325 million in value.

In a message embedded onto the Ethereum blockchain, Wormhole offered the attacker a $10 million bounty to return the funds, according to blockchain analytics company Elliptic, which called the Wednesday incident the fourth largest cryptocurrency hack ever.

Soon after the heist, analysts at blockchain security firm CertiK said the hack represented the largest-ever attack on the Solana network and an “unfortunate reality” for the booming decentralized finance space, which has heated up among investors alongside the broader cryptocurrency industry over the past year, despite a growing number of similar hacks.

CRUCIAL QUOTE

“[Jump] believes in a multichain future and that @WormholeCrypto is essential infrastructure,” Jump, which acquired Wormhole’s parent company for an undisclosed amount in August, tweeted Thursday, referring to the type of protocol Wormhole uses to allow users to swap tokens between different blockchains. “That’s why we replaced 120k ETH to make community members whole and support Wormhole now as it continues to develop.”

TANGENT

Even though the space only started gaining traction in 2020, there have been more than $2 billion in direct losses suffered by decentralized finance services due to hacks and exploits, according to Elliptic on Wednesday. In August, hackers breached blockchain-based platform Poly Network and extracted more than $600 million in cryptocurrencies, marking DeFi’s biggest hack ever. Those funds were eventually returned .

WHAT WE DON’T KNOW

It’s still unclear who the alleged hacker is and whether Wormhole is still working to retrieve the stolen funds.

BIG NUMBER

$192 billion. That’s the market value of all decentralized finance tokens, according to cryptodata website DeFi Llama. The space shot past a $250 billion valuation for the first time ever in December but has since fallen amid a broader cryptocurrency market sell-off.

KEY BACKGROUND

Securities and Exchange Commission Chairman Gary Gensler has repeatedly said the decentralized finance industry, also known as DeFi, deserves more government scrutiny. Such platforms largely sidestep traditional intermediaries like central banks and exchanges for financial services and instead rely on blockchains and cryptocurrencies to process transactions. Gensler has said the practices can implicate securities, commodities and banking laws, and last year called on Congress to ramp up its authority over the cryptocurrency industry, which he likened to the “Wild West.”