Alpha Homora/Cream Finance Hack

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Alpha Homora

Luckily, users of the Alpha Homora platform did not end up losing their funds in this exploit. However, the Alpha Finance platform owes the Cream Finance platform a repayment of the funds which were lent out on their behalf.

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

About Alpha Homora

"Alpha Finance Lab is an ecosystem of DeFi products that will interoperate to maximize returns while minimizing risks for users. Alpha products focus on capturing unaddressed demand in DeFi in an innovative and user friendly way." "In the morning of February 13, 2021, the Alpha Finance DeFi project was hacked. By exploiting a vulnerability in the Alpha Homora v2 contract, the attacker was able to extract $37.5 million from the project." "Alpha Homora was audited by Quantstamp and PeckShield, both of them skilled and respectable firms."

"This exploit is complicated, involving more than 9 transactions." "The attacker used Alpha Homora to borrow and lend repeatedly with Iron Bank, which allows for leveraged lending." "A few missing input checks in very specialized conditions allowed the hacker to abuse Alpha Homora’s privilege of borrowing an unlimited amount of funds from Cream Finance’s Iron Bank." "In the first stage of the attack, the attacker borrowed 1,000e18 sUSD from HomoraBankv2" ", exploiting a rounding error in the protocol." "By repeatedly borrowing sUSD from Alpha Homora and loaning it to Iron Bank, the attacker is able to build up a hoard of cySUSD." "The exploit involved the use of CREAM Finance's Iron Bank service, which gives out uncollateralized loans to trusted smart contracts." The "exploiter coded a contract that tricked Alpha Homora into believing it is their own contract. The exploiter then used this privileged access to trick CREAM Finance into lending out $37.5M worth of ETH and stablecoins." "At the end of the day, the Alpha Homora attacker was able to make approximately $37.5 million by exploiting the vulnerable contract."

"In the wake of the attack, the Alpha Finance team has resolved these issues and limited buying and repayment to four tokens (ETH, DAI, USDC, and USDT). These corrections are designed to prevent a similar attack from occurring in the future." "[W]e have closed the loophole that made the exploit possible." "Rather than pay off the sUSD debt, the attacker used Tornado Cash – an Ethereum privacy mixer – to make off with the funds." "We are investigating with the relevant parties and will investigate with the authorities to trace the attacker." "No user funds were lost, and Alpha and CREAM teams are working on how to heal the debt between the protocols. The loophole that made the exploit possible has been closed, and the project is going through peer review and another security audit ––Alpha Homora V2 had been audited by Quantstamp and Peckshield." "[S]ome have speculated that Alpha will print tokens to cover the loss." "[T]he incident triggered yet another discussion of why auditors failed to catch the bug, whether they are properly incentivized, and how this situation can be mitigated."

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 - Alpha Homora/Cream Finance Hack

Date	Event	Description
February 13th, 2021	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 $37,500,000 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

There do not appear to have been any funds recovered in this case.

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

It's just another example of how "security audits" are a failed model and it's impossible to detect all possible exploits.

Transactions such as those involved in this exploit would be seen as highly suspicious to any human platform operator, and storing funds offline is the only truly secure method of protection.

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.