To prevent a significant phishing scam, Velvet Capital, a decentralized finance (DeFi) asset management protocol, had to briefly take down its website.
On April 23rd, cryptocurrency users noticed strange goings-on at Velvet Capital’s trading platform among its X community members. When attempting to link to the interface, they were required to grant permission to use their digital wallets for the protocol.
Based on their own probe, Velvet Capital warned investors to reject any wallet connection requests coming from the app until more information was available.
If investors had inadvertently authorized fraudulent transactions, they should now disable access to the protocol’s wallet to protect their assets from being misused. Furthermore, Velvet Capital took the step of disabling the application to limit additional financial damage for its investors.
Velvet Capital founder Vasily Nikonov announced the website closure on Telegram:
“ATTN, don’t interact with the Velvet website, we’re closing it for maintenance and investigating the issue, we will issue a post-mortem once the issue is solved.”
Approximately two hours following the website’s shutdown, Nikonov announced that his team was collaborating with technology specialists and cybersecurity experts in an attempt to reclaim control of the site from the hackers.
Before Velvet Capital made an official statement about a website hack, investigation firms Blockaid and Scam Sniffer had already confirmed the breach based on their blockchain investigations. Users who carried out transactions with Velvet Capital after April 23, at 5:39 am UTC, could potentially be affected by this cybercrime event.
Nikonov suggested that affected users create a support request on Discord, providing the necessary transaction information to the Velvet Capital team for resolution.
“Rest assured that the smart contracts are not impacted and funds on Velvet are not affected, we’re investigating the front-end issue that some of the users faced this morning and will share the results asap.”
Nikonov highlighted that no users reported losses as of 6:50 am UTC.
On November 28, 2023, Decentralized Finance (DeFi) platforms Aerodrome and Velodrome experienced identical security breaches affecting their user interfaces. Both projects issued statements on X, advising users to avoid engaging with the systems as they carried out probes into the incidents.
Based on the findings of blockchain investigator ZachXBT, the attackers successfully stole approximately $40,000 in cryptocurrencies during the incident.
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2024-04-23 10:24