hold or not - JPEG'd DeFi Protocol Recovers $10 Million in Stolen Crypto After Hacker Returns Funds

JPEG’d, a decentralized finance (DeFi) protocol known for its lending services against collateralized nonfungible tokens (NFTs), has recently confirmed the return of 5,495 Ether (ETH) worth approximately $10 million at current prices.

These funds were previously stolen in a hack that took place on July 30.

In a commendable turn of events, the hacker responsible for the attack agreed to return the funds and received a bounty of 610.6 ETH (about $1.1 million) in exchange for doing so.

The hack had a significant impact on JPEG’d, resulting in a loss of $11.6 million in crypto assets.

However, the team announced on August 4th, through a post on the X platform (formerly known as Twitter), that the returned funds had been deposited back into the JPEG’d decentralized autonomous organization multisig wallet address.

They also stated that they view the incident as a “white-hat rescue,” indicating that they consider the hacker’s return of the funds as a well-intentioned act to identify vulnerabilities in their system.

The larger DeFi ecosystem also suffered a blow in late July when the hacker targeted several liquidity pools on Curve Finance, resulting in total losses estimated to be around $70 million worth of crypto assets.

The hacker exploited a security vulnerability in the Vyper smart contract programming language used in these pools.

Notable projects such as Ellipsis, Alchemix, JPEG’d, and Metronome faced losses of millions of dollars in stolen assets from their liquidity pools, and Curve Finance lost approximately $22 million worth of Curve DAO (CRV) tokens.

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To recover the stolen funds, Curve, Metronome, and Alchemix united and proposed an initiative on August 3rd, offering the hacker a 10% bounty and immunity from legal action if they returned the remaining 90% of the funds.

Surprisingly, the hacker swiftly agreed to the deal, leading to a gradual return of the stolen funds to the affected projects.

Apart from JPEG’d, the hacker returned 4,820.55 Alchemix ETH (alETH) worth $8.8 million to the Alchemix Finance team and 1 ETH ($1,829) to the Curve Finance team.

This incident serves as a reminder of the vulnerabilities that exist in the DeFi space and highlights the importance of collaboration and community-driven efforts in dealing with such attacks.

While the damage caused by the hack was substantial, the prompt resolution and recovery of a significant portion of the stolen funds showcase the resilience of the DeFi community in the face of challenges.