Bancor Self-Hack

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Bancor

An exploit existed in the Bancor smart contract caused by a missing authentication of the "from" address in a "safe" transfer function. The exploit was exposed in March of 2020. Finally, in June 2020, a white hat hacker exploited it, prompting Bancor to exploit the remaining funds themselves.

The white hat returned the funds, and Bancor disbursed all funds back to affected users.

This is a global/international case not involving a specific country.

About Bancor

"The Bancor Network is a cross-chain cryptocurrency conversion platform that lets you convert between Ethereum and EOS tokens (others are in the works) without the need of a middleman or other third party. Bancor Network Token (BNT) is the intermediary token used by Bancor to initiate exchanges. It’s both an ERC-20 token and EOS token."

"Bancor, an app focused on asset swaps and conducted one of the largest ICOs of 2017, self-hacked to fix a critical vulnerability." "[W]arnings about the new exploit had been floating around since Mar. 2020." "Bancor's Telegram group calls users to check their approvals for the flawed contracts and decline them."

"A contract does not need to be malicious to steal all your funds. It can be just be buggy. In this case, there as no authentication of the `from` address."

"According to the Bancor Network, the vulnerability was discovered last night at midnight, 00:00 UTC, in a new version of the BancorNetwork v0.6 contract, which was deployed just two days ago, on June 16. Since then, Bancor-controlled address drained nearly USD 460,000 worth of user funds at risk that should be returned to their owners."

"As a result of one of the system’s updates, users who interacted with the upgraded smart contract could lose their funds." "Bancor team may move the *current* funds to another wallet, but can't cancel the allowance. So whenever such an address would receive such a token again, it's money on the floor."

"$545,000 were at risk, but the Bancor team initiated a hack themselves to protect assets." "Looks like they are trying to white-hat drain user funds before someone else can, but it appears they are/were too late in many cases." "Any users who have traded with Bancor during the last 48 hours and granted approvals to the Bancor contract are encouraged to go to approved.zone and revoke all approvals, says the network. In case of help or questions, the protocol is redirecting its users to its Telegram group."

"Besides the team, however, other white-hat hackers managed to drain over $130,000. Bancor got lucky, as it could have been malicious actors."

"The protocol is planning for a major Bancor V2 release next month, and the incident will not affect its launch, Bancor's Head of Growth, Nathaniel Hindman, told Cryptonews." "Bancor’s BNT is one of the cryptocurrencies recently considered for listing at a major U.S.-based cryptocurrency exchange Coinbase."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Bancor Self-Hack

Date	Event	Description
June 28th, 2020	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $585,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

The total amount recovered has been estimated at $585,000 USD.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

Users should not be granting unlimited approvals to any smart contract, or should use a separate wallet for each smart contract with only those funds they are actively using.

Smart contracts should have 2 security audits from independent services, and a third after 6 months of operation. An industry insurance fund should be established to assist users and compensate losses in the event of failure. During the early development stages, until the market is willing to underwrite the entire balance, the vast majority of funds should be stored offline in a multi-signature treasury wallet.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.