DeFi Protocol Platypus Announces Major Compensation after $9M Hack

DeFi protocol Platypus is in talks with Aave and stablecoin issuer Tether in order to recover the funds stolen from last week’s exploit.

In a major announcement on Thursday, February 23, decentralized finance (DeFi) for stablecoins – Platypus Finance – announced a major compensation to users affected in the recent exploit.

In a major exploit, hackers drained more than 49 million from the protocol last week. Platypus said that it would repay a minimum of 63% of the funds to its users after it recovered the funds. In order to confirm the exploiter’s identity DeFi protocol Platypus worked with crypto exchange Binance.

The hacker was using a Binance account that went through KYC checks for a withdrawal request. DeFi protocol Platypus said that they have contacted law enforcement and filed a complaint in France.

In the Platypus hack last week, the hacker exploited a bug in the platform’s solvency check mechanism. As a result, the hacker managed to steal $9.2 million worth of digital assets causing the platform’s native stablecoin USP to lose the dollar peg.

Platypus DeFi Protocol Suffered Three Consecutive Attacks

In their blog post, Platypus explained that the exploit consisted of three consecutive attacks. The first was among the most severe and drained a total of $8.5 million in stablecoins such as Tether’s USDT, Circle’s USDC, Maker’s DAI and Binance’s BUSD from the DeFi protocol’s main pool.

The DeFi protocol managed to recover $2.4 million of stolen USDC stablecoins through the help of blockchain security firm BlockSec. Furthermore, Tether also froze $1.5 million in stolen USDT.

The second attack had mistakenly transferred $380,000 worth of stablecoins to the popular lending protocol Aave. DeFi protocol Platypus reached out to Aave’s governance forum for the release of those assets.

During the third attack, $287,000 worth of assets were stolen. Platypus has to consider these funds as unrecoverable and lost as the hacker moved the stolen assets through the crypto mixer Tornado Cash and the encryption service Aztec Network.

In its blog post, Platypus also mentioned that they haven’t used its $1.4 million treasury reserves in order to compensate the victims of the hack. However, if Platypus couldn’t recover more assets over the next six months, they might need to use the treasury funds.

If Tether could help in reminding the frozen USDT and Aave approves the recovery proposal, a total of 78% of users’ funds will be recovered. The DeFi player said that they are planning to recover the stablecoin swap protocol next week, without its depegged stablecoin USP.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.