ChainSwap ETH Exploit

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ChainSwap

ChainSwap is a smart contract which gives users the ability to move tokens between chains using their protocol. The protocol depends on storing funds in smart contract hot wallets.

On July 2nd, an exploit allowed attackers to steal $800k from the smart contract. ChainSwap is using their treasury to recover the losses.

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

About ChainSwap

"The cross-chain hub for all chains." "ChainSwap is a bridge protocol that links the Ethereum and Binance Smart Chain (BSC) blockchains." "It supports Binance Smart Chain, Ethereum, Polygon, and Huobi Eco Chain." "ChainSwap is a cross-chain asset bridge & application hub for smart chains. ChainSwap allows projects to seamlessly bridge between ETH, BSC and HECO. In the future ChainSwap will be integrating chains and provide full cross-chain solutions between BTC, DOT, SOL and more."

"On July 2nd at 04:30 AM UTC ChainSwap got exploited." The exploit "resulted in the loss of $800K."

"[W]e noticed an anomaly on the bridge, some users reported that their coins were actively withdrawn from wallets that interacted with ChainSwap."

"Upon discovery ChainSwap team immediately froze the bridge, shut down all nodes and a fix was deployed within 30 minutes. Local police authorities, Huobi & OkeX which the attacker interacted with to withdraw/deposit funds got immediately contacted. Team’s of affected projects got alerted."

"The attacker has since returned 2.2M RAI after ChainSwap tracked stolen funds to Huobi and OKEx exchanges." "With the help from local police and OKex the ChainSwap team managed to obtain the attacker’s email. Negotiations started. The ChainSwap team managed to negotiate back CORRA and RAI tokens."

"Since the RAI Finance team found out that the ChainSwap contract was attacked and the RAI assets were stolen yesterday, the team has actively communicated with the trading platform, the community and other parties. At present, Huobi and Bithumb have suspended the deposit of the RAI, and the RAI trading price is currently maintained at a stable level. At present, the hacker has returned 2.2 million RAI to the ChainSwap Deployer address: [0xc96ecc8456cd0e5b20c1c40989adad9c1809da9c]. RAI Finance’s loss due to this incident was reduced to 670,000 RAI. In the future, the RAI Finance team will continue to pay attention to this matter and actively communicate with all parties. The team will announce other developments with the community as soon as possible."

"Total damage from the hack is estimated to be around $800,000. For small amounts, the ChainSwap team bought back affected tokens from the market and refunded wallets accordingly. For the rest, we are working with project teams to set up compensation plans. Full compensation is almost completed. In addition to compensation, we will prepare bonuses for users who are affected and it will be carried out accordingly in the coming days."

"Full compensation is almost completed. All affected users will be compensated from the ChainSwap treasury."

"ChainSwap v2 is launching in the upcoming months. The ChainSwap team will be hiring more auditing firms to perform audits."

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 - ChainSwap ETH Exploit

Date	Event	Description
July 2nd, 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 $800,000 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

Theoretically, decentralized finance will eventually result in hackers having exploited every vulnerability that exists. However, it's impossible to know when that will occur and if a contract is truly secure, as opposed to there still being an exploit that just hasn't been noticed yet. For any complex smart contract, it's impossible to prove security and plenty of fully audited contracts have been exploited.

In this situation, there was luckily not much taken, and it was all ultimately reimbursed from the treasury. Platforms should, generally, be prepared for the full loss of all assets stored in hot wallets (including smart contracts). Assets that do not need to be accessed quickly should be stored securely in a simple offline multi-signature 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.