After Suffering Second Largest Crypto Hack Ever, Jump Crypto Recovers 120,000 ETH Leveraging Its Own Smart Contracts

Jump Crypto, the crypto-specialist division of Jump Trading Group, recently faced one of the most difficult conundrums a firm can face: let a hacker walk away with roughly $195 million in stolen Ethereum — or compromise its own smart contracts to get the money back ?

The firm ultimately chose the latter, executing a counter-exploit to empty two Oasis vaults known to have held 120,000 in wrapped ETHETH that had originally been stolen from them in the famous February 2022 Wormhole Exploit.

The “counter-exploit” as it is being called, exploited upgradable proxy patterns on the Oasis Network to alter the logic of the underlying smart contract. This tricked the hacker’s vault into sending the funds to a new third-party wallet. This updated logic used the same stop-loss trigger that the hacker himself had activated, giving vault access to an AutomationBot. Jump and Oasis were then able to jointly “upgrade” the trigger to move the stolen funds.

While the recovery of funds is apparently good for the firm, the idea that a backdoor could be programmed by a DeFi platform to move user funds could be very damaging to both Jump Crypto and Oasis’ reputation. If these firms can fool wallets that hold their assets in self-custody, then they ultimately have control over both the assets and the network. Both parties seem to know this and have said very little publicly about the fund recovery.

However, Oasis confirmed in a four-point press release that funds from the exploiter’s wallet were “immediately sent to a wallet controlled by the authorized third party”, they do not go into detail about how they actually obtained these funds, saying only that it was “possible on due to a previously unknown vulnerability in the design of the admin multisig access.” The previously unknown vulnerability was reportedly pointed out to the company by a whitehat group investigating asset recovery.

Jump Crypto has not confirmed any involvement in recovering the stolen funds. Rather, almost everything we know about the recovery comes from public ledger data and forensic blockchain analysis by Blockworks research analyst Dan Smith.

“The transaction history suggests that Jump Crypto and Oasis worked together to counter exploit an upgradeable Oasis contract, securing the stolen funds from the original Wormhole Exploiter’s vault,” Smith wrote in his forensic report.

The press release from Oasis emphasizes that the restoration was made following a court order, which at face value can be seen as the network’s hands being tied. But given the tenuous feelings many crypto users have about government interference in private crypto user funds, this could potentially be their own PR landmine.

Jump and Oasis are far from the only DeFi platforms that have suffered major hacks in the past year. It is estimated that the DeFi industry at large saw at least $3.6 billion stolen in 2022, raising questions both about the inherent security of decentralized protocols and what possible means exist to extract funds – as well as the ethics of those alternatives .

In the last 2 years, there has been a steady growth in DeFi platforms over centralized exchanges. It remains to be seen whether either hacks or upgraded smart contracts will shake consumer confidence in the sector.

I reached out to both Oasis and Jump Crypto for comment and did not hear back.

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