“This is too weird even for crypto,” wrote one of my Decrypt colleagues on Slack this week. He was speaking, of course, about the $600 million Poly Network hack that livened up an otherwise slow week in crypto-land.
In case you missed it, the episode began on Tuesday with news of the biggest hack in crypto’s history and concluded days later with the hacker returning the Ethereum they stole back to Poly Network, a project that facilitates transfers between blockchains.
In between came the weird stuff. That including the hacker giving ether tips to random Internet people who helped him, and Poly Network posting a “Dear Hacker” letter asking for the money back. Then there was the on-chain AMA during which the hacker, typing in broken English, shared thoughts like “cross-chain hacking is hot” and “Ask yourself what to do had you facing so much fortune.”
The extra weird part, for my colleague at least, came amid speculation the hack was carried out by a white hat hacker—or even an insider—seeking to teach Poly Network a lesson about poor security practices. In response, the company offered the hacker a $500,000 bug bounty, only for the hacker to refuse the reward. “So much dignity for an absolute anon,” observed another colleague.
The episode caught the attention of the mainstream financial world, including Bloomberg’s Matt Levine, who titled his widely read column “Crypto hackers are nice now.” Others, though, wondered if the hacker decided to return the funds after Tether and exchanges began to blacklist the stolen tokens, and Poly Network warned that the hack amounted to a major crime.
We may never find out who the hacker was or what their motives were. But the Poly Network hack does offer a few lessons about the state of the crypto industry.
First, cybersecurity is still critical to any crypto project and those who don’t take it seriously face disastrous consequences. Second, the crypto industry is better able to withstand a major hack than in the past. This is reflected in the quick efforts by Tether and others to block the transfer of the stolen funds, and by the fact that news of the attack had little impact on the price of Bitcoin and Ethereum. This is very different than the infamous Mt. Gox hack of 2014, which devastated the price of Bitcoin for months and knocked the broader crypto industry into a tailspin.
The final lesson of the Poly Network affair is that the crypto world is still a weird, goofy place. Even as it’s grown into a multi-trillion dollar industry, crypto is still shaped by hacks, hijinks and eccentrics. In this context, “Dear hacker” is likely to take their place alongside the likes of Bitcoin Pizza guy, Dorian Nakamoto, the “Bitconnnnnnect” yodeler, Bitcoin Sign Guy and the myriad other oddballs and meme maestros who make crypto such an interesting thing to cover. Have a great weekend.
This is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt Debrief email newsletter to receive it in your inbox in the future. And read last weekend’s column: Behind the Breakup of FTX and Binance.