The decentralized finance (DeFi) protocol Cream Finance has reportedly suffered a major breach, losing $130 million to hackers in what might be one of the largest sums of money stolen in the growing DeFi field.
Bloomberg reports that DeFi protocol Cream Finance has suffered a major hack, losing $130 million in possibly one of the largest hacks in decentralized finance so far. DeFi is a fast-growing sector within cryptocurrency, explained recently by Barron’s:
Welcome to decentralized finance, or DeFi—the new frontier of crypto and one of its fastest-growing areas. DeFi encompasses freewheeling marketplaces where thousands of tokens are listed and traded, without any oversight from a central authority. Other DeFi networks consist of giant lending platforms that are like crowdfunded money markets or order books for trading. Users add their crypto to a liquidity pool in exchange for fees paid by borrowers who might trade the tokens. Interest rates can top 10%, depending on the crypto and size of the pool.
The attack was first reported by Block Crypto citing a tweet by PeckShield Inc. which highlighted a large flash-loan transaction that appeared to be the source of the theft.
— PeckShield Inc. (@peckshield) October 27, 2021
The DeFi industry has seen billions of dollars in investor funds pumped into protocols and platforms in recent years but has also been a frequent target of hackers. Many use flash loans, a form of uncollateralized lending, as a method to exploit poorly secured protocols.
Cream fell victim to a similar attack that stole almost $38 million in February and almost $19 million in August. In August, hackers stole $600 million worth of crypto tokens from the PolyNetwork protocol in what has been the largest DeFi hack to date.
Stephane Ouellette, the chief executive and co-founder of FRNT Financial Inc., a cryptocurrency-focused capital-markets platform, commented: “This unfortunately highlights one of the Big Three risks in DeFi right now. First, tokens representing very new projects are trading at very large, arguably inflated valuations. Two, the overwhelming majority of the platforms are within a year old, which implies unproven technology.”
The SEC appears to be aiming to regulate DeFi protocols and centralized crypto lenders like BlockFi and Celsius. Both platforms are currently having their regulatory structures challenged in multiple U.S. States. Cream’s token dropped by 26 percent on Wednesday to its lowest since May following the hack.
Cream Finance stated in a tweet that it is investigating the hack and will share updates as they are available.
We are investigating an exploit on C.R.E.A.M. v1 on Ethereum and will share updates as soon as they are available.
— Cream Finance 🍦 (@CreamdotFinance) October 27, 2021
Read more at Bloomberg here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address email@example.com