Seneca Stablecoin Hacker Returns Stolen Funds After Exploit

Stablecoin protocol Seneca faced a critical breach, with at least $6.4 million in digital assets exposed due to a protocol smart contract approval mechanism flaw.

CertiK and Blockchain Security Firms Warn of Exploit, $6.4 Million Compromised on Ethereum and Arbitrum Networks

Blockchain security firms, including CertiK, flagged the exploit on Feb. 28, prompting warnings to users to retract approvals on Ethereum and Arbitrum networks. Initial loss projections stood at $3 million, but over 1,900 ETH, valued at approximately $6.4 million, were compromised.

Seneca attacker’s wallet showing about $3 million in Ether. Source: CertiK

Seneca Initiates Investigations and Offers Bounty Amid Exploit, Requests Hacker's Cooperation in Fund Recovery Efforts

The exploit was attributed to a critical “call” vulnerability in the protocol's smart contract, allowing external calls to any address. The absence of a pause mechanism in the project's contracts necessitated user permission revocation.

Seneca initiated investigations with specialists and extended a $1.2 million bounty for fund recovery. In an on-chain message on Feb. 29, Seneca requested the hacker to return 80% of the stolen funds to a designated Ethereum address, with the hacker retaining 20%.

Seneca team’s on-chain message to the exploiter. Source: Seneca

Hacker Returns Majority of Stolen Funds to Seneca After Appeal, Retains Portion as Bounty Before Further Transfers

Following Seneca's appeal, the hacker returned approximately 1,537 ETH, equivalent to around $5.3 million, to the specified wallet address. Retaining 300 ETH, valued at about $1 million, the hacker accepted the 20% bounty before transferring the ETH to two different addresses.

Swift Response Recovers Portion of Stolen Funds, Highlighting Efforts to Address Decentralized Protocol Vulnerabilities

The swift response led to the return of a portion of the stolen funds, showcasing efforts to mitigate losses and address vulnerabilities. However, the incident underscores the ongoing challenges in securing decentralized protocols against exploitation.