3min chapter

Crypto Critics' Corner cover image

Harmony Horizon Exploit, Lazarus Group, and Cryptocurrency Bridges

Crypto Critics' Corner

CHAPTER

Bridges in 2023 - I Don't They're Not Going Away?

35 fraudulent instructions were issued by security hackers via the Swift network to illegally transfer close to a billion dollars from the Federal Reserve Bank of New York. The wormhole hacker behavior of leveraging long and into the cryptocurrency ecosystem is an interesting contrast to the Harmony bridge hacker who just keeps mixing and chain hopping, mixing andChain Hopping.

00:00
Speaker 2
35 fraudulent instructions were issued by security hackers via the Swift network to illegally transfer close to a billion dollars from the Federal Reserve Bank of New York, belonging to a Bangladesh bank, the central bank of Bangladesh. These guys are clearly quite talented and able to steal money almost. They did steal, they didn't steal a billion dollars, but they did steal money essentially from not only the central bank of Bangladesh, but the Federal Reserve of New York. So it's kind of crazy that like you said, now they've just moved on to like, oh, you mean we can steal like 10 times as much by just hacking these civilian networks instead that aren't protected and have all of their code open source and haven't checked for errors and are simple multi-sigs that we can break? I don't know. It's troubling to me that I would be worried if I was just in Sun and it's funny. I kind of figured that we wouldn't be discussing bridges in 2023, but I think this is going to come up like I don't they're not going away and this is going to come up
Speaker 1
again. Yes, it absolutely will. I mean, there's two more we intend to discuss in this episode alone, but I do think there is kind of an interesting dynamic I want to focus on here. One of the other bridges we want to discuss is wormhole, which we discussed in the past and at the time was one of the largest cryptocurrency hacks ever with about 300 million being taken out of the bridge. That hacker had since swapped basically all of it into ether and has now started this absurd process of going levered long unstaked ether. So they swapped their ether for wrapped staked ether, borrowed die against that, used that to buy more staked ether, wrapped that, borrowed more die against that, used that to buy more staked ether, wrapped that, borrowed more die against that, used that to buy more staked ether until the hacker of the wormhole bridge has ended up as the fifth largest holder of staked ether. And the reason I'm bringing this up is one, it's wild to watch this hacker just go levered long on staked etherium, but also because it illustrates something we talked about back in our episode about the 2016 Bitfinex hack when we were talking about Rosalcon and Dutch. It's hard to cash out hot cryptocurrencies. These groups do it. Like Lazarus Group works with a variety of money launderers around the world to be able to make these conversions and to eventually get this into cash. But it is challenging for these hackers to get the majority of their funds out in usable currency. And so we see them take these moves where they end up more in the cryptocurrency ecosystem, right? Because it is so challenging to cash out. And I think this wormhole hacker behavior of leveraging long and into the cryptocurrency ecosystem is an interesting contrast to the Harmony bridge hacker who just keeps mixing and chain hopping, mixing and chain hopping and sending the rogue desks and exchanges to cash out what they can't. And so like, it looks to me like they're probably two pretty distinct groups with different motivations.

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