The incident, previously reported by Coincu, unfolded on May 28 when Jimbos Protocol, a liquidity protocol operating within the Arbitrum system, fell victim to a malicious attack, resulting in a staggering loss of $7.5 million.
The breach itself exploited a vulnerability in the protocol’s liquidity conversion mechanism. Jimbos Protocol’s liquidity was distributed across a price range without strict equality constraints, creating a vulnerability that allowed attackers to manipulate swap orders in their favor.
Jimbos Protocol initially set out to combat issues related to liquidity and volatile token prices through an innovative approach. However, the protocol’s design flaws ultimately paved the way for malicious actors to exploit the system.
During the attack, the perpetrators managed to siphon off a total of 4,090 ETH from the Arbitrum network. Subsequently, they employed the Stargate bridge and the Celer Network to transfer approximately 4,048 ETH from the Ethereum network.
The successful transfer of the stolen funds through Tornado Cash highlights the ongoing challenges faced by the crypto community in safeguarding decentralized systems against determined attackers. Security measures and protocol development remain critical to mitigating such incidents in the future.
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