Hyperliquid net outflows top $250M amid fears over North Korea hackers

As a seasoned crypto investor with over a decade of experience in the digital asset market, I find myself both intrigued and alarmed by the recent events surrounding Hyperliquid. While I have witnessed numerous ups and downs in this dynamic industry, the allegations of North Korean hackers trading on the platform certainly raises red flags.

Following reports from security specialists about North Korean hackers utilizing the novel layer-1 crypto derivatives platform, Hyperliquid experienced its greatest one-day withdrawal.

As an analyst, I’d like to share some insights based on recent findings. In a December 23rd post, security researcher Tay Monahan indicated that hacking groups linked to North Korea have potentially been utilizing the Metamask platform since at least October.

“Yall, DPRK doesn’t trade. DPRK tests,” Monhan added in a follow-up post.

Over the past 30 hours, withdrawals from the derivatives platform exceeded $256 million, as per information from Dune Analytics.

On December 23, the outgoing funds from Hyperliquid recorded a record high of approximately $502.71 million, whereas incoming funds surpassed $253.5 million.

On their Discord platform, Hyperliquid clarified they’ve noticed rumors about potential activity linked to North Korean accounts. However, it’s important to note that there has been no successful hack or exploit on Hyperliquid by DPRK or any other entity. All user funds are safely accounted for.

This year, hacking groups based in North Korea, including the Lazarus Group, have managed to steal approximately $1.3 billion in cryptocurrency – more than doubling their take from last year. This increase appears to be part of Kim Jong Un’s strategy to gather funds for a nation that has been largely isolated due to international sanctions.

As a crypto investor, I’ve come to understand that Monahan raises concerns about Hyperliquid. He points out that the platform’s security and infrastructure primarily depend on only four validators, which suggests a high degree of centralization. This could potentially pose risks in terms of control and reliability.

Monahan’s post sparked a wide range of responses among cryptocurrency experts, with those who back Hyperliquid claiming that she was unnecessarily spreading fear.

The indigenous HYPE token of the exchange experienced a drop as well, plummeting by 20% from its peak price of $35 on December 22nd, now being traded at approximately $28 based on TradingView information.

In another perspective, numerous developers and cybersecurity professionals have endorsed Monahan’s credibility as an expert in the cryptocurrency field.

In a subsequent message, Day cautioned, “I’ve had past encounters with Lazarus, and trust me when I say, it’s best to avoid any actions that might seem ‘foolish’, as they usually aren’t.

There are “two lines of defense” in case of major exploit

An anonymous programmer named Cygaar proposed that, in the event of a cyber-attack by North Korea on Hyperliquid, there are two defensive strategies that could potentially prevent large amounts of US Dollar Coins (USDC) from being pilfered.

In an attempt to halt the transfer of USDC tokens by potentially harmful users, the issuer Circle might block certain addresses entirely, as suggested by Cyggar.

If they respond swiftly, they might stop the attacker from selling the stolen USDC, thereby locking the funds in place. This situation would potentially enable Circle to restore the funds to the HL bridge, as mentioned.

In addition, Cygaar stated that if necessary, the Arbitrum Chain – the foundation upon which Hyperqliuid operates – could revert the chain to prevent any potential loss of funds. Contrarily, Day asserted that a rollback for Arbitrum is “definitely not” an option unless there was a severe, existential threat to the chain.

2024-12-24 06:28

There are “two lines of defense” in case of major exploit

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