After user backlash over a cumulative $550,000 in funds that were inaccessible to people who hadn't heard about the breaking change, Starkware re-enabled the ability for people to upgrade their wallets – leading some to question why it was ever disabled in the first place if it could be trivially re-enabled to prevent the loss of half a million in assets.
Apparently realizing his mistake, Fraternidade Crypto ended the stream, and says he tried to relocate the crypto to a new wallet. It was too late, however, and someone watching had already taken the around 86,000 MATIC (~$50,000) and various NFTs in the wallet.
Fraternidade Crypto posted an emotional video after the fact, explaining that the stolen funds were his life savings. He said he planned to file a police report, and also offered a reward for the return of the funds.
Fortunately, he was able to recover the stolen MATIC, though he says he has not been able to recover the NFTs, which have "incalculable value as they are NFTs, estimated value of approximately 15k dollars still lost".
As a part of the agreement, Impact will destroy all remaining Founder's Keys NFTs, forgo royalties from future secondary sales, and publish a notice of the order on its websites and social media.
Founder's Keys in the rarest tier have recently sold for $1,500 apiece, and promised to give their holders access to Impact Theory's self-help content, which supposedly taught viewers how to "unlock their potential and pursue greatness". According to the SEC, the company encouraged holders to view the tokens as an investment into the business.
A user asked what would happen to remaining seed money, if any, in a Twitter reply. Garfield answered that they "still have a meaningful portion of our seed funding" but that he hadn't decided what to do with it.
Balancer acknowledged the hack, writing on Twitter that "Balancer is aware of an exploit related to the vulnerability [disclosed on August 22]. Mitigation procedures have drastically reduced risks, but [we] are unable to pause affected pools." They reiterated that users needed to withdraw funds from affected liquidity pools to prevent further thefts.
The blockchain researcher known on Twitter as MevRefund questioned why Balancer didn't execute a whitehat attack on their own protocol to try to safeguard the vulnerable funds.
"Today is a bad day," wrote SOL Big Brain on Twitter.
Sure enough, within an hour of zachxbt's tweet, the project drained $5.2 million from the protocol and deleted its website and Telegram group.
According to zachxbt, the project also shared on-chain links to the March 2023 Kokomo Finance rug pull, which saw its perpetrators profit around $4.5 million.
The transfers and change to the multisig sparked fears that the project was rug pulling, or had been hacked. This led to a massive $PEPE sell-off, with the token plunging around 17%.
A day after the transfers, a PEPE team member posted on the project's Twitter account, alleging that the transfers were indeed theft by three of the project's other team members.
Someone observed the DEA wallet send a small test transaction before transferring the remaining seized funds, and quickly used a crypto wallet address with identical characters at the beginning and end to send an airdrop to the DEA source wallet. When the DEA agent went to send the remaining funds, they copied-and-pasted the address, believing it was the same one they'd sent the test transaction to. This is a common scam in the crypto world known as "address poisoning", and is successful primarily because crypto wallet addresses are very long strings of characters that people usually copy-and-paste, and only identify by the characters at the start and end.
Upon discovering that they'd been duped, the DEA contacted Tether to ask them to freeze the funds. However, by that time, the scammer had already converted the money into ETH, which couldn't be frozen. The DEA is now working with the FBI to try to trace the theft.
Rather than "100x-ing", the token immediately plummeted when DeSalvo sold his ~41 billion Blazar tokens. DeSalvo is accused of using his profits from the scheme to speculate on other crypto tokens, pay for personal expenses, and reimburse one investor who threatened legal action.
DeSalvo is also being charged over a separate investment scheme he operated, where he solicited investments on Facebook, promising to use his claimed trading expertise to earn massive returns. The SEC alleges he lost most of the money in bad investments, and stole the rest for himself, blaming the losses on market movements.