SushiSwap Pays $200K Bounty to Recover $600K Stolen by Hackers

Decentralized exchange SushiSwap has been able to recover an additional $600,000 in crypto stolen from users earlier this month.

In the initial exploit, SushiSwap’s new router, RouterProcessor2, was attacked. The router had been deployed to 14 different blockchain networks.

Crypto worth more than $3.3 million at the time was drained, mostly ETH belonging to DeFi figure 0xSifu, and ​​any users who had approved the relevant smart contract in their wallets were urged to immediately revoke approval.

As the smart contract was not upgradeable, a temporary fix was difficult to implement. Blockchain security startup HYDN helped SushiSwap pick up the pieces after the attack. 

SushiSwap disabled its frontend to prevent more users from depositing assets into the pool, but the smart contract remained operational, Warren Mercer, the CEO of HYDN, told Blockworks.

“​​The only two options were really to alert users to the issue and ask them to remove approvals or to perform a whitehat rescue to save funds,” Mercer said.

A decision was made to front-run any further attacks and transactions. A “whitehat rescue” was determined as the best way forward, draining vulnerable funds before they could be stolen.  

In last year’s Multichain attack, the culprits ended up piling after users were alerted to the situation. HYDN and SushiSwap hoped to avoid a similar scenario.

While the rescue played out, another whitehat hacker who had reported the same bug through Immunefi attempted to recover 100 ETH themselves, Mercer notes.

“Unfortunately, he didn’t use a private mempool, so MEV bots detected his whitehat attempt in the public mempool who then replicated the attack and began stealing user funds,” he said.

In response to this, HYDN was tasked with quickly performing its whitehat attack. It began sequestering funds and deploying a ‘cross-chain watcher’ contract to protect against further attacks. SushiSwap paid the firm a $200,000 bounty for their efforts.

“To date, we have managed to rescue over $600.000 in user funds for Sushi, with the Sushi team managing to also gain back a large portion of the stolen funds,” Mercer said. Other amounts of ETH had been recovered directly following the attack.

Secured funds are still sitting in HYDN’s wallet, and funds will be distributed to affected users once SushiSwap completes a contract audit.

SushiSwap has so far retrieved a total of 885 ETH ($1.76 million). Another 795 ETH ($1.58 million) is kept in a rewards vault for the time being.

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