DeFi used for market manipulation worth $350k - ETH and BTC price takes a hit

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valentin
Feb 15, 2020

Someone attacked the DeFi leverage trading protocols on Saturday early morning UTC. The attacker took a loan of 10000 ETH, which he used to short WBTC and at the same time borrow a lot of WBTC and sell it on Uniswap. The large sell moved the price down a lot, which allowed the attacker to get a lot of profit from his leveraged short position. The result: estimated $350000 profit.


The suspected transaction is this one: https://etherscan.io/tx/0xb5c8bd9430b6cc87a0e2fe110ece6bf527fa4f170a4bc8cd032f768fc5219838


The attacker used several DeFi protocols in the attack: bZx (Fulcrum) to place the short, dYdX to take the 10k ETH flash loan, Compound to borrow the WBTC and Uniswap to manipulate the WBTC price.


You can read more from this twitter thread: https://twitter.com/defipulse/status/1228698196085362689


People are discussing the exploit a lot on the Fulcrum telegram channel: https://t.me/b0xNet

BTC and ETH price going down after the attack

Hours after the attack the price of ETH and BTC are in the red. The attack is raising concerns in the crypto community that the derivatives markets could be very dangerous when paired with low liquidity. Some people are arguing that on-chain oracle protocols like LINK can be used to mitigate such manipulations, while others are blaming Uniswap and the ability to use low liquid tokens for margin trading.


We will continue to monitor the situation.

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valentin
Feb 15, 2020

Thanks for reading!

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