In what has been dubbed the largest DeFi hack of 2023, Euler Finance was drained of $197 million by a hacker. However, in a surprise twist, it appears that the hacker may have had a change of heart.

On March 18, 3,000 Ether worth $5.4 million were returned to Euler Finance’s deployer address from the hacker’s address. While this is a significant amount of money, it’s important to note that the entire loot hasn’t been returned yet, and chances that it will be are slim.

The hacker used multiple transactions to drain the funds and later used a multichain bridge to transfer the stolen funds from the BNB Smart Chain to Ethereum. Soon after Euler Finance announced a $1 million bounty against the hacker, the stolen funds were seen being moved into a crypto mixer called Tornado Cash.

In an attempt to retrieve the funds, Euler Finance demanded that the hacker return 90% of the stolen funds within 24 hours to avoid possible jail time. While the recent return of 3,000 Ether is a positive development, it remains to be seen whether the hacker will return the entire loot. Immediately after the news broke, Euler’s EUL token is currently trading at around 3.5 USD, up over 100% in just 24 hours.

DeFi hacks have become a growing concern in the cryptocurrency industry, and this incident highlights the need for tighter security measures. Euler Finance’s response to the attack, including the announcement of a bounty and demand for the return of the stolen funds, shows that companies are taking these incidents seriously and are willing to take action to protect their customers’ funds.

Lazarus Group Suspected to be Behind Euler Finance Hack

A recent discovery by Lookonchain has revealed that the wallet address controlled by the Euler Finance hacker has sent 100 ETH to a wallet used by the infamous Lazarus Group to hack Ronin last year. This move has raised suspicions that the Lazarus Group may be the mastermind behind the theft of the lending protocol’s funds or that they have some murky connection here.

Lazarus Group is a name that has become familiar in the crypto industry in recent times, having been accused by the US Department of Justice of being the mastermind behind the Ronin Bridge attack, which caused damages of up to $625 million, and being a suspect in the $100 million Horizon Bridge security incident in June.

Meanwhile, Euler Finance was hit by a flash loan attack on March 13, causing losses of up to nine figures and making it the most serious DeFi hack of 2023 to date, affecting many other projects as well. After the incident, Euler offered a $1 million bounty as a reward for the attacker’s capture and return of the stolen funds. The hacker even returned 100 ETH to someone claiming to be a victim of the attack who lost 78 ETH.

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After days of silence, the hacker behind the Euler Finance attack has returned 51,000 ETH, equivalent to around $89 million, to the project, accounting for almost half of the funds that were stolen.

According to blockchain data, on the evening of March 25th, the wallet address of the Euler Finance attacker sent back the said amount to the project. This development has brought the total amount of funds recovered to 54,000 ETH, as the hacker had returned 3,000 ETH on March 18th.

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The price of Euler’s token, EUL, is reportedly surging following the news of the hacker returning the funds. Euler Finance suffered a flash loan attack on March 13th, resulting in a loss of $197 million worth of assets in the form of ETH, DAI, WBTC, and USDC.

Initially, Euler Finance refused to entertain the idea of paying a ransom, but after negotiations, it seems that positive progress has been made between the project and the hacker.

Interestingly, last week, the hacker group, Ronin Network, attempted to scam the Euler Finance attacker by tricking them into clicking on a phishing link, with the aim of taking over their wallet address.

Flash loan attacks have become increasingly common in the decentralized finance (DeFi) space. They are a form of smart contract exploit, where an attacker takes out an uncollateralized loan and uses it to manipulate the market before paying back the loan. Such attacks have caused significant losses in the DeFi space.

The return of the funds by the hacker is a positive development for Euler Finance, as it means that they will be able to recover some of the assets that were stolen. It also highlights the importance of engaging in negotiations and finding a solution that works for all parties involved. The recovery of stolen funds is crucial for the continued growth and development of the DeFi ecosystem.

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The exploiter of flash loans claims to have "no intention of keeping what is not ours" and want to "accord" with Euler Finance.

Euler Finance, an Ethereum-based lending platform, may be one step closer to retrieving cash lost in a $196 million flash loan incident last week, with private conversations now underway with the exploiter.

On March 20, days after delivering cash to a red-flagged North Korean address, the exploiter stated they now wish to "reach to an arrangement" with #Euler in an on-chain message.

"We want to make this easy on all those involved. We have no intention of retaining what is not ours. Establishing secure communication. "Let us reach a deal," the exploiter remarked.

Hours later, Euler replied with its own on-chain message, acknowledging the message and asking the exploiter to talk “in private,” stating:

“Message received. Let's talk in private on blockscan via the Euler Deployer address and one of your EOAs, via signed messages over email at contact@euler.foundation, or any other channel of your choice. Reply with your preference.”

Euler has previously attempted to reach an agreement with the exploiter following the exploit, demanding that they restore 90% of the monies they stole within 24 hours or face legal penalties.

There was no reaction, so Euler issued a $1 bounty prize for any information leading to the exploiter's arrest and return of the funds 24 hours later.

While the exploiter's identity is unknown, the current language used by the exploiter may indicate that more than one individual is engaged.

Chainalysis, a blockchain analytics firm, tweeted on March 17 that a recent 100 Ether (ETH) transfer to a wallet address associated with North Korea could indicate that the breach was carried out by the "DPRK" — the Democratic People's Republic of Korea.

Based on the firm, this could be an intentional attempt to mislead investigators.

Additional transactions from the exploiter's wallet address include 3000 ETH sent back to #EulerFinance on March 18, as well as cash sent to cryptocurrency mixer #TornadoCash and an alleged victim of the exploit.

On March 20, another address contacted Euler on-chain, claiming to have discovered a "solid string of connections" that could assist them in determining who and where the exploiter was.

In a surprising turn of events, the architect behind the March 13 Euler Finance exploit has returned an additional $26.5 million worth of Ether to the Euler Finance deployer account on March 27, according to on-chain data. The return of these assets comes just two days after the hacker returned 58,000 ETH (worth over $101 million at the time) to the Euler team.

The return of these funds marks a significant development in the aftermath of the attack, which had resulted in the loss of over $200 million worth of assets. The return of over $138 million worth of crypto assets by the attacker has given hope to the Euler team and the wider crypto community that the attacker may be willing to cooperate and work towards a resolution.

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On March 27, at 6:21 pm UTC, an address associated with the attacker sent 7,738.05 ETH (worth approximately $13.2 million at the time it was confirmed) to the Euler deployer account. In the same block, another address associated with the attacker sent an identical amount to the same deployer account, bringing the total to 15,476.1 ETH (around $26.4 million). Then, at 6:40 pm UTC, the first wallet sent another transaction to the deployer account for $10.7 million worth of the Dai stablecoin, bringing the total of all three transactions to approximately $37.1 million.

Both of these addresses have received funds from the account that Etherscan labels “Euler Finance Exploiter 2,” which suggests that they are under the control of the attacker. It remains unclear why the attacker is returning the stolen assets, and whether they will return all of the stolen assets or just a portion.

The return of such a large amount of assets is an unusual move by a hacker, and it could signal a willingness to cooperate with the Euler team. It could also be a way to reduce the risk of being identified and prosecuted for the attack. However, it is important to note that the return of these assets does not absolve the attacker of their actions, and they may still face legal repercussions.

Overall, the return of over $138 million worth of crypto assets by the attacker is a significant development in the aftermath of the Euler Finance exploit. The return of these assets gives hope that a resolution can be reached, and that the wider crypto community can work towards preventing future attacks.

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This article was republished from azcoinnews.com