A crypto system known as Beanstalk has been infiltrated and ultimately lost more than $180 million in reserves. The hack occurred through unusual means in which an attacker used borrowed funds to garner the voting rights necessary to transfer all the money into his (or her) own personal account.
Beanstalk Has Lost a Lot of Money
On its website, Beanstalk is described as a “decentralized” asset that’s also a stable currency. While Beanstalk itself is the network in which digital currency transfers occur, the blockchain system provides users with crypto units known as beans, the official tokens of the platform. Those making deposits on its network are widely referred to as “bean farmers,” and accounts or wallets are referred to as “silos” in what are plays on agricultural terms.
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Sadly, all those “beans” have gone missing from the system and have been transferred into an account that was later used to repay the borrowed funds used to garner the voting rights to move the money. David Gerard – author of “Attack of the 50 Foot Blockchain” – explained in a recent interview:
It’s very [much] like a hostile corporate raid funded by junk bonds except it was over in ten seconds. In regulated markets, we have laws and regulations on how you can take over a company and drain it, but it’s not clear that this action was illegal. Even the project concedes that the raider acted according to the rules that Beanstalk set out.
Crypto expert Stephen Diehl also threw his two cents into the mix, commenting:
It’s possible for someone to basically buy up all the shares in the organization. In the normal corporate world, this would be illegal because it’s embezzlement and self-dealing. However, with a DAO [decentralized autonomous organization], it basically exists outside any regulatory perimeter, so basically anything goes and the code dictates everything. It’s technically ‘legal’ in some sense, but it’s a very grey area.
The loss occurred on Easter Sunday. The news was provided to users through a Discord message produced by the company’s co-founders. The message read:
Honestly not sure what to type. We are [expletive]. This project has not had any venture backing, so it is highly unlikely there is any sort of bailout coming.
Likely No Wrongdoing?
One of the big conundrums involving the hack is that it technically occurred through non-illicit measures. The co-founders continued their statement with:
Earlier this morning, as soon as we learned of the attack, we contacted the FBI and informed the FBI’s internet crime center of the attack. We intend to fully cooperate with the FBI to track down the perpetrators, and hopefully recover everything that was stolen.
Crypto crime and related scams are on the rise as of late according to a recent report issued by the BBB.
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