DDEX XDX Swap Backdoor

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DDEX

The DDEX XDX Swap project is an exchange platform operating on the HECO blockchain. The funds were stored in a smart contract hot wallet, which was exploited to take $5m USD worth of assets. A node governance maneuver allowed the funds to be returned from the attacker's wallet.

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

About DDEX

"DDEX is a decentralized exchange platform in the process of expanding into decentralized lending so that they can offer their users the ability to create leveraged long and short positions. They're currently beta testing their decentralized margin exchange."

A "Peckshield alert shows that" "XDX Swap on DDEX, a cross-chain decentralized exchange on the Heco chain, was attacked. The attacker made a profit of 85.17 ETH (approximately $176,000). "At present, the attacker has transferred all the profits across the chain to Ethereum."

"From July 1st to 2nd, the HECO ecological chain project XDX Swap (DDEX) was attacked by hackers, and various digital virtual currencies worth more than 5 million U.S. dollars in the fund pool were stolen."

"[T]he DdeX code is suspected to have a backdoor." "The DDEX project party and the HECO White Hat Security Network Alliance team confirmed that the attack was due to a vulnerability in the project's smart contract code. The attacker used the vulnerability to steal user assets stored in the fund pool."

"HECO initiated the first node governance, and returned over 5 million USD of funds recovered from the DDEX security incident 2021-08-2119:08:0542."

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 - DDEX XDX Swap Backdoor

Date	Event	Description
July 1st, 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 $5,000,000 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

The primary issue here is the safe and secure storage of funds. All platform funds were stored in a smart contract hot wallet, which is impossible to prove as secure. The issue could have been avoid by storing customer funds primarily in offline multi-signature storage.

However, no funds were lost in this case, as the governance maneuver allowed for their return.

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.