Compound Finance Discord Server Phishing
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Compound Finance is one of the most popular decentralized finance protocols for loans. On September 21st, their official Discord account posted about a new initiative to redistribute 30% of the collected fees to users. Users were instructed to visit a claim portal to see what their eligible payout would be. It turns out that the Discord server was compromised, which allowed the attacker to post malicious phishing links. While the link was up for several hours and many users reported almost falling for the phishing attack, it is unclear whether anyone was actually impacted.[1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20]
About Compound Finance
"Compound Finance is one of the most widely used protocols in the DeFi ecosystem. Deployed on Ethereum, its purpose is to issue automatic, permissionless loans of Ether and various ERC20 tokens. As of February 2022, the protocol held more than $10 billion in assets across 18 markets."
"To invest in Compound, users deposit Ether or supported ERC20 tokens into one of the protocol’s markets. In exchange, they receive cTokens for that market, with which they can redeem their investment. Compound’s cTokens are differentiated and denominated according to the underlying asset. For example, investors who deposit Ether (ETH) receive cETH tokens, which are redeemable for ETH. Similarly, investors who deposit USDC receive cUSDC tokens, which are redeemable for USDC, and so on. In addition to being redeemable for the underlying asset, cTokens can be traded according to their market value."
"The total value of each market increases as funds are lent out and repaid. As the value held in a market grows, the cTokens for that market increase in value and can be redeemed for more of the underlying asset. In this way, investors accrue interest. When the protocol operates as intended, the value of a cToken relative to its underlying asset should only increase, i.e., only positive interest rates should be possible."
"We're excited to announce the launch of our new fee-sharing initiative, allowing you to directly benefit from Compound's success!"
"Key Points: 30% of all protocol fees are now redistributed to active users. Compound III users receive a 2.5x multiplier on rewards. Open to all: Anyone who has interacted with Compound can claim."
"How It Works: Visit the claims portal below. Connect your wallet. View and claim your accured rewards."
"Reward Calculation: Based on your lending/borrowing activity, COMP holdings, and governance participation. Accrues in real-time, claimable at your convenience. No lock-ups or vesting periods - rewards are liquid upon claim."
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.
| Date | Event | Description |
|---|---|---|
| September 21st, 2024 2:53:00 AM MDT | Discord Reported As Compromised | The Compound Finance Discord is reported as compromised by users defnothikariii and coloredcoins. coloredcoins shares a screenshot of the phishing post. |
| September 21st, 2024 9:32:00 AM MDT | Resolution Posted In Tweet | The Compound Finance team shares a tweet which includes that the access was regained and secured, and warns users to always remain vigilant. |
| September 21st, 2024 9:55:00 AM MDT | Unban User Request | One user reports that they were still banned and requests to be unbanned. |
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 is unknown.
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
"SECURITY PSA: The official @compoundfinance Discord server has been hacked. Do NOT click on any links or trust any interactions in the server until further notice."
"Discord channel is compromised, hackers are spamming the channels. would someone have a look at it?"
".@compoundfinance Discord has been compromised for over 6 hours. Still no updates from the team, what is going on?"
"Compound community’s Discord server has been hacked. Please do not click on any links until the situation is resolved."
Ultimate Outcome
"Attention: On 9/20/24 the Compound community’s Discord server was compromised.
Access has been regained and secured.
Always stay vigilant for scams and do not click any suspicious links."
Total Amount Recovered
The total amount recovered is unknown.
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?
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.
References
- ↑ @compoundfinance Twitter (Accessed Oct 24, 2024)
- ↑ Compound-TUSD Integration Issue Retrospective - OpenZeppelin blog (Accessed Oct 24, 2024)
- ↑ @defnothikariii Twitter (Accessed Oct 24, 2024)
- ↑ @Dimash20222531 Twitter (Accessed Oct 24, 2024)
- ↑ @JulianApeSwap Twitter (Accessed Oct 24, 2024)
- ↑ @DooWanNam Twitter (Accessed Oct 24, 2024)
- ↑ @ark_tme Twitter (Accessed Oct 24, 2024)
- ↑ @LewellenMichael Twitter (Accessed Oct 24, 2024)
- ↑ @PleaseL97187 Twitter (Accessed Oct 24, 2024)
- ↑ @PleaseL97187 Twitter (Accessed Oct 24, 2024)
- ↑ @BCVInvesting Twitter (Accessed Oct 24, 2024)
- ↑ @BCVInvesting Twitter (Accessed Oct 24, 2024)
- ↑ @RiskGPT Twitter (Accessed Oct 24, 2024)
- ↑ @ReportingVision Twitter (Accessed Oct 24, 2024)
- ↑ @SnoopX_ai Twitter (Accessed Oct 24, 2024)
- ↑ @Friedrich__Wil Twitter (Accessed Oct 24, 2024)
- ↑ @HarshaKaramchat Twitter (Accessed Oct 24, 2024)
- ↑ @coloredcoins Twitter (Accessed Oct 24, 2024)
- ↑ @coloredcoins Twitter (Accessed Oct 24, 2024)