Defrost Finance Says Hacked Funds Have Been Returned

The hack, which some observers had characterized as a rug pull, was estimated to have netted $12 million.

AccessTimeIconDec 26, 2022 at 3:20 p.m. UTC
Updated May 9, 2023 at 4:05 a.m. UTC

Defrost Finance, which on Sunday said its V1 and V2 products had been exploited, said the hacker in the larger V1 attack has returned the funds.

"We will soon start scanning the data on-chain to find out who owned what prior to the hack in order to return them to the rightful owners. As different users had variable proportions of assets and debt, this process might take a little [time]," the decentralized-finance protocol said in a post linked on its website.

In a tweet thread posted on Sunday, the team said a first attack used a flash loan to drain funds out of its V2 product. A second larger attack used the owner key to exploit V1. The protocol, which offers leveraged trading on the Avalanche blockchain, didn’t say how much had been taken.

Blockchain security firm PeckShield, citing “community intel,” said at the time that the exploit may have been a rug pull that made off with $12 million. Earlier Monday Certik, also a security company, said it had been unable to contact members of the team and posted a graphic indicating it was treating Defrost as an exit scam. Defrost's Twitter account isn't configured to accept private messages.

A rug pull, or exit scam, can occur when developers create and establish a liquidity pool and then remove the funds and disappear after investors have bought the related token. Usually, the team behind the scheme goes silent and can't be contacted. Defrost Finance, however, announced the attack and said in a tweet that it was willing to negotiate with the people responsible for a return of the funds.


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Sheldon Reback

Sheldon Reback is a CoinDesk news editor based in London. He owns a small amount of ether.


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