Loopscale Hack: Breakthrough Bounty Negotiation for Stolen Crypto Return

The recent Loopscale hack, which saw approximately $5.8 million in assets pilfered from the Solana-based DeFi protocol, has taken a surprising turn. The exploiter is now reportedly in discussions to return the stolen crypto in exchange for a bounty. This development offers a glimmer of hope for recovery following the significant security incident.

What Happened During the Loopscale Hack?

On April 26, the Loopscale hack targeted two of the protocol’s yield vaults. The attacker made off with roughly 5.7 million USDC stablecoins and 1,200 Solana (SOL) tokens. This exploit led Loopscale to temporarily halt its lending markets as they assessed the damage and sought to understand the breach’s nature. The incident highlighted ongoing security challenges within the decentralized finance space.

Is a Bounty Negotiation Underway for the Stolen Crypto?

Yes, a bounty negotiation is actively happening. The day after the exploit, the hacker used the Etherscan blockchain scanner to send a message indicating their willingness to return the exploited funds. They proposed a ‘white hat’ agreement, suggesting a 20% bounty on the returned amount. As a sign of good faith, they reportedly returned 5,000 wSOL immediately. Loopscale confirmed they are agreeable to collaborating on a white hat agreement, and discussions for the remaining funds are ongoing via public blockchain messages.

Why Do Hackers Sometimes Negotiate After a Crypto Hack?

It’s not uncommon in the Web3 space for protocols to offer bounties to hackers. This approach aims to incentivize the return of funds, which can be difficult or impossible to recover through traditional legal channels due to the pseudonymous nature of blockchain. While bounties are offered, successful recovery of stolen crypto remains challenging. Reports indicate only a small fraction of the billions stolen in recent quarters is ever recovered. The negotiation here represents a potential, albeit rare, path to recovery.

How Has Loopscale Responded to the Solana DeFi Exploit?

Following the exploit on their Solana DeFi platform, Loopscale temporarily paused several functions. Initially, all lending markets were halted. Since then, the protocol has selectively re-enabled some functions, such as loan repayments, top-ups, and loop closing. However, other critical functions, including Vault withdrawals, remain restricted as the team continues its investigation and implements mitigation strategies to prevent future incidents. The exploit impacted around 12% of Loopscale’s total value locked (TVL), specifically affecting the USDC and SOL vaults.

What’s Next for the Loopscale Bounty Negotiation?

The outcome of the bounty negotiation is still uncertain. Public messages confirm talks are progressing, but the final terms for the return of the bulk of the stolen crypto are yet to be finalized. The situation remains fluid as both parties work towards a potential resolution. The crypto community is watching closely to see if this negotiation results in a successful recovery of funds for the affected users and the protocol.

In conclusion, the ongoing talks between Loopscale and the exploiter offer a potential path forward after the recent crypto hack. While challenging, successful bounty negotiations can provide a quicker and more effective way to recover assets than pursuing lengthy investigations or legal actions in the decentralized world. The focus now is on whether an agreement can be reached to secure the return of the remaining funds from the Loopscale hack.