Tapioca Foundation Offers $1M Bounty to DeFi Attacker Following $4.7M Heist

Tapioca Foundation has offered a $1 million bounty to the attacker responsible for a $4.7 million DeFi exploit. The foundation requests the return of the remaining $3.7 million after recovering some stolen funds.

In a bold move, the Tapioca Foundation has offered a $1 million bounty to the attacker responsible for stealing $4.7 million from its decentralized finance (DeFi) protocol. The foundation described the attack, which occurred on October 18, as a “social engineering” incident that led to significant financial loss.

In an on-chain message sent on October 20, the foundation addressed the attacker directly, offering them $1 million in Tether (USDT) with no strings attached. In exchange, Tapioca has requested the return of the remaining $3.7 million in stolen assets.

The Attack and Bounty Offer

The heist saw the theft of 591 Ether (ETH) and $2.8 million in USD Coin (USDC). Tapioca claims the attacker exploited a vulnerability in the vesting contract for its TAP token and USDO stablecoin. The hacker managed to claim vested TAP tokens and manipulated USDO by adding a minter, creating an infinite supply that drained the USDO-USDC liquidity pool.

The $1 million bounty offer is higher than the typical 10% reward given in such incidents, reflecting Tapioca’s willingness to resolve the issue. The foundation hopes this generous settlement will encourage the attacker to return the rest of the stolen funds.

Hack, Counter-Hack, and Recovery

In a surprising turn of events, Matt Marino, a co-founder of Tapioca, revealed that the foundation managed to “hack the hacker” and recover 1,000 ETH, worth more than $2.7 million, that had been collateral backing the USDO stablecoin in a liquidity pool. While this recovery represents a major win for Tapioca, the attack still caused significant damage to the TAP token’s value, which plummeted from $1.40 to just 2 cents following the attack.

The details of the attack were shared on the project’s Discord channel, where Marino explained that his co-founder, known pseudonymously as Rektora, had fallen victim to a phishing scheme during an interview process. This phishing attack involved malicious software that gave the hacker access to critical contracts.

Despite the partial recovery, the attacker’s wallet still holds funds on the BNB Chain, and it remains uncertain whether they will return the rest of the stolen assets.

Rising Phishing Scams in the Crypto World

This incident is part of a broader trend of phishing scams that continue to plague the crypto space. In September alone, over 10,000 victims lost a combined $46.7 million to various phishing attacks, according to Scam Sniffer, a Web3 anti-scam platform.

Phishing has become an increasingly common tactic used by cybercriminals to exploit vulnerabilities in the DeFi sector. Recent threats include the “Cthulhu Stealer” malware, which targets MacOS systems to steal personal information such as MetaMask passwords and cold wallet private keys. Additionally, fraudulent crypto wallet apps like WalletConnect have targeted mobile users, stealing $70,000 in a sophisticated scam that mimicked the legitimate WalletConnect protocol.

Conclusion

As phishing attacks and DeFi exploits continue to rise, the Tapioca Foundation is taking a proactive approach to recovering stolen assets. By offering a $1 million bounty, they hope to incentivize the attacker to return the remaining $3.7 million. Meanwhile, the incident highlights the growing challenges faced by crypto users and platforms as cybercriminals become more sophisticated in their tactics.

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