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Back Story

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Two days back I shared about how a hacker was able to take away 40 million worth of crypto by using Re-entrancy technique which is one of the vulnerabilities for smart contracts. if you have not read that blog I will share a link to it below so that you can read it and then come back to this blog and know why I am writing this, that blog is really a informative blog and you should definitely give it a go so that you can understand about one of the types of attack used by hacker to compromise and take away million of dollars from the platform.

https://inleo.io/@theindiantrader/what-is-reentrancy-and-how-it-was-used-to-exploit-a-decentralized-perpetual-exchange-l7a?referral=theindiantrader

Now, if you’ve already read that blog, you’re all set because you already know what happened with GMX, a decentralized perpetual exchange. So, in that post, I mentioned how the GMX team offered a white hat bounty to the hacker which was 10% of the stolen funds if he agreed to return them within 48 hours. When I got aware about this fact, I thought why will the hacker return those funds back for 10% bounty amount. Well, here comes the surprising part...!!!

What did the hacker do?

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The hacker actually agreed to return the funds. Yes, you read that right. He accepted the GMX team's offer and decided to take the 10% white hat bounty instead of running away with the entire stolen amount. Now, let us talk about why the hacker chose to return the money instead of just running away with the full $40 million. There are a few reasons behind this decision and I am going to share them with all of you.

• First, the GMX team clearly said they would not take any legal action if the funds were returned within 48 hours. That is the main reason why the hacker decided to return all of the stolen amount to the GMX Team.

• Second, which I already talked about is the hacker was offered a white hat bounty, which means they would still get 10% of the stolen amount and that will be his legal money so he will not have to go behind the bars and can enjoy free money worth millions of dollar.

• He could have also decided to vanish forever as Web3 wallets are usually anonymous and It is very hard to track who actually owns them. But here is the thing to know, the tools that are used to track these types of funds have improved a lot and it is very difficult to stay anonymous because of that.

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So yes, because of all these reasons, the attacker accepted the bounty. He even sent an on chain message to the GMX team saying that he would return the funds later. One more important thing I forgot to mention earlier is that the stolen amount was already flagged by U.S. authorities. So no matter where the hacker tried to send the funds, they would likely have been frozen or blocked. There was no way to escape with all the funds and In short the only option left was to accept the white hat bounty and the hacker actually did that. So we can also say that it was not only a smart and safe move but also the only option for Hacker.

How did it impacted GMX ?

Now that things seem to be back on track with GMX, the trust that was broken two days back is slowly being restored again, I can say that myself as I am one of the GMX holders. After the hacker returned those funds back, GMX token saw a 16% pump which clearly shows that the market is reacting positively to the news of the fund recovery done by GMX Team. Though GMX is still trading below where it was trading at the time of attack and I hope that we will surpass it in coming days and not see anything similar happening with the project again.

If we think about this same situation happening in real life do you think something similar will happen? Imagine a thief stealing money from someone, you would never see them being given an option to simply return the money and legally keep 10% of it as a reward. That would sound crazy in the real world. But in crypto world , especially with these decentralized systems where the user stay anonymous options like these are often used. This helps both the parties to stay away from legal battles which no one wants and in most of the cases recovery is the only priority. What do you think about this, feel free to write a comment so that I can know how do you see it.

Before we stop writing, I will leave few tips for you all. If you are using a DEX be it a perpetual exchange or a normal DEX make sure to diversify your funds over to different trusted platform. That technique will help you even in the Centralized exchanges as well. Why to keep all your money at one place and not diversify it to be more safe. That is what I have to say before ending this post.

Thank You, protect your funds, and Happy trading everyone.

Posted Using INLEO