Compound Finance, a leading decentralized finance (DeFi) protocol, has been targeted in a hijacking incident, according to blockchain investigator ZachXBT. According to a telegram post, ZachXBT broke the news to the community.
Compound Finance Users’ Need to be Extremely Careful
In his report, the investigator said the official Compound Finance website has been compromised and is redirecting users to a phishing site. This newly registered phishing site poses severe risks to the security of users’ personal data and funds.
In response to the incident, ZachXBT has urged all users to exercise extreme caution. He recommends avoiding the compromised Compound Finance website until further notice and advises users to verify any communications or URLs related to the platform independently. Likewise, the protocol’s team has confirmed the hack and is doing everything possible to address the breach.
Meanwhile, a team member at the protocol, affirmed that the protocol is not affected by the breach. As such, users’ funds remain secured by the smart contracts.
Why are DeFi Protocols Vulnerable to Attack?
While DeFi has many advantages, including increased transparency and accessibility, its adoption across various blockchain platforms has attracted cybercriminals looking for small exploits to steal money from users. As reported by TheCoinRise, over $3 billion was stolen from crypto projects in 2022. Per the report, the top five crypto thefts accounted for $1.48 billion from DeFi protocols.
Among the factors that make DeFi protocols vulnerable to hacking include smart contract vulnerabilities, centralized points of failure, lack of regulation, complex interaction, and economic incentives. If smart contracts are not properly coded, hackers can use them to steal funds or carry out other malicious actions.
It is, therefore, critical that users and developers take security seriously and apply best practices to reduce the likelihood of attacks and DeFi protocol vulnerabilities.
Cryptocurrency Scams Rising
Last month, Ripple’s Chief Technology Officer David Schwartz issued a warning to the crypto community regarding a surge in digital asset scams. The warning from David is part of a broader trend of increasing cryptocurrency scams.
Recently, DaVinci, a team member from the Shiba Inu project also alerted the community about scams involving fake tokens. Scammers have been creating multiple variations of the team’s yet-to-launch TREAT token on the ShibaSwap decentralized exchange to steal investors’ funds. In addition to the warnings from crypto insiders, authorities are also sounding the alarm.
In May, Canadian authorities issued a public alert due to a significant rise in crypto scams. One prevalent scam involves “romance scams,” where fraudsters build a romantic relationship with victims and then persuade them to invest in fraudulent crypto sites.
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