SDF price drops to $0 after the ShadowFi hack

What’s new? On September 2, ShadowFi, a crypto DeFi project, suffered an exploit that caused the value of SDF, the liquidity pool’s token, to collapse by 98,5%, approaching the $0 mark. The protocol team confirmed this on Twitter and reported that it was working to find a solution to the problem. According to cybersecurity company CertiK, attackers gained access to the burn of tokens and destroyed 10,3 million SDF. They then exchanged 8,4 SDF for 1078 BNB (~$298 200) and transferred the assets to the banned crypto mixer Tornado Cash.

We have experienced an exploit in our LP contract that has left it at $0. The ShadowFi team is hard at work looking for a solution that works in everyone's best interest. Please have patience while we push through this.All presale proceeds are secured and safe. https://t.co/1keFuxkYWl— ShadowFi (@ShadowFi_) September 2, 2022

What else is known about the exploit? Analysts at cybersecurity company PeckShield also confirmed information about the ShadowFi hack. According to them, the project was exposed to an exploit, possibly due to a vulnerability of the SDF token that allows any user to burn the asset. The attacker is tagged as NeorderDAO in PeckShield’s internal database.

#PeckShieldAlert PeckShield has detected @ShadowFi_ suffered an exploit possibly due to a vulnerability of SDF token which allows the token can be burnt by anybody, the exploiter grabbed ~1,078 $BNB (~$301k). $SDF has dropped 98.5%https://t.co/O8ugq2sU3p pic.twitter.com/Ljg3RfkGFl— PeckShieldAlert (@PeckShieldAlert) September 2, 2022

What is known about ShadowFi? It is a decentralized financial payment network launched in 2021. The platform was called Don’t Know Your Customer (DKYC) until it was rebranded in 2022. ShadowFi is known for not conducting the know your customer (KYC) procedure. The platform’s native token is SDF.

On September 1, Kyber Network’s DeFi liquidity protocol was hacked. As a result of the exploit, attackers withdrew about $265 000 in cryptocurrency. The vulnerability appeared in the frontend of the KyberSwap exchange, after which the developers suspended its operation to investigate.