Recently, the Bybit exchange was the target of a hacker attack which resulted in the theft of a significant amount of cryptocurrency. In response to this incident, Chainflip, a cross-chain decentralized exchange (DEX), took proactive measures to protect its platform from misuse by the Bybit hackers. The Chainflip Development Team announced that Chainflip Labs is implementing a protocol update, version 1.7.10, that includes improved screening tools for exchanges. This update will allow Chainflip Labs to reject ETH and ERC20 token deposits that are facilitated by exchange operators on its network, including SwapKit and cross-chain DEX aggregator Rango.
“After discussions between the team, community, on-chain liquidity providers, all major interfaces that use Chainflip, and most validator providers, we are moving forward with a plan to enable interfaces to robustly block illicit flows on the Chainflip protocol.” The move is aimed at preventing Bybit hackers from using the Chainflip platform to launder stolen funds. Chainflip Labs emphasized in its official statement that “all of its participants” have voluntarily agreed to protect the protocol from exposure to Bybit platform attackers. The company believes that protecting the protocol from illicit flows will help build stronger prices and liquidity over time, improving its competitiveness.
“The broad and overwhelming consensus among the Chainflip ecosystem is that illicit flows put the protocol at risk by exposing LPs to too much risk, and that we would all like to see the interests of regular users protected. This is why we acted quickly to cut off access to the main interface after the Bybit hack flows were detected on Saturday morning, and have been working with our other providers to ensure that no illicit flows have touched the protocol since Saturday.”
The update is already underway, with most of the code already written and testing and deployment efforts underway. Chainflip expects the update to go live within 24 to 72 hours. “This solution should form a robust and permanent protection for LPs on the network,” Chainflip said. “Going forward, Chainflip will not be of use to anyone whose wallet can be linked to any major incident, hack, fraud or scam.” This action by Chainflip demonstrates the company’s commitment to maintaining the security and integrity of its platform, protecting its users against illicit activities.
It is worth remembering that on February 21, the well-known cryptocurrency exchange Bybit, based in Singapore, faced a serious security incident. CEO Ben Zhou reported that the platform was the victim of an attack that resulted in the theft of US$1.4 billion from its Ethereum (ETH) cold wallet, generating a significant impact on the cryptocurrency market, which saw a significant drop after the hack.