DeFi protocol bZx is being sued for platform hacking

The total losses of the 14 plaintiffs from the hacking attack on the network amounted to $1,6 million

04.05.2022 - 11:10

627

2 min

What’s new? Customers of the hacked bZx DeFi protocol have sued the platform and are seeking refunds. The class action lawsuit, filed on May 2 in the Southern District Court in California, lists 14 victims who claim to have lost between $800 000 and $450 000 because of the hacking of the platform. The total amount of damage is $1,6 million, Blockworks reports.

Blockworks’s material

Details of the court case. The victims claim that the theft occurred because the protocol failed to implement the necessary security measures. The plaintiffs are represented by Gerstein Harrow LLP, a law firm whose lawyers specialize in protecting cryptocurrency users.

The complaint alleges that because the bZx protocol is positioned as a decentralized autonomous organization (DAO) with no legal formalities, it can be considered a “general partnership.” And this means that all its participants are legally liable.

“Without the protection of a corporation or limited liability company, everyone involved in a DAO’s governance is liable for the protocol’s negligence and illegality,” Gerstein Harrow LLP Partner Jason Harrow said.

What happened before? The bZx hack took place in November 2021, with hackers managing to withdraw $55 million. The attackers used a phishing attack on one of the platform’s developers. bZx claims that the North Korean group Lazarus is responsible for the hack.

The developers promised to refund the money to customers by using other coins and buying back debt tokens of the BZRX platform. The complaint called this plan “woefully inadequate,” and added that “at the current buyback rate, full repayment will take thousands of years.”

Author: