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Crypto is anyonymous and public at the same time. What?

It’s actually pseudonymous - every crypto transaction made is public record and verifiable by anyone. However, linking the transaction to a specific person’s identity is much harder.

Theres a person or group that is really hoping not to have their wallet linked to their ID… the Kyber Hacker(s).

This person or group is blackmailing the Kyber protocol and has balls of steel. Buckle up. This is a crazy story… and it’s unfolding right now.

🚨 What Happened?

• Date of Incident: November 23, 2023.

• Target: KyberSwap, a multi-chain DEX aggregator.

• The Exploit: A smart contract reentrancy attack.

• Losses Incurred: Approximately $47 million across multiple networks.

• Impact on Total Value Locked (TVL): A drastic drop of 90% from $84.9M to $8.28M on the day of the ha​​ck.

🔍 The Technical Flaw

• Vulnerability: The exploit centered around a vulnerability in the mint function of KyberSwap’s v2 reinvestment token (KS2-RT).

• Loophole for Attack: The mint function's implementation likely had a callback feature, which created a reentrancy looph​​ole.

Basically, a hacker found a flaw in the Kyberswap code and exploited it to steal ~47 million dollars worth of cryptocurrency that other users had deposited in the protocol to lend out and earn interest.

The exploit? A rounding error in the code. Literally. The kyber devs rounded the wrong way on a math problem in the code, opening the door to this exploit.

Here’s the crazy part to this whole thing. The hacker has reached out to the Kyberswap team with ransom note. Here’s a picture ⬇️

⌚ TL;DR

The kyberswap hacker(s) demanded complete control of the kyber company and protocol. They promised to completely remake the project for the better.

They want access to all company assets and documentation, as well as full control over the kyber governance system, so they can make changes at will.

They offered to buy out all of the project executives at a fair valuation. Employees? Salaries will be doubled under the “new regime.”

Users will be refunded at 50% of their losses.

The hacker ends by saying that if any law inforcement agencies contact him, the stolen money will be lost forever.

The letter is incredibly ballsy. In fact, I think its unprecidented. Most of the hacks i’ve seen don’t involve a ransom… after all, the money has already been stolen.

🟢 Kyber’s Response

The hacker has given Kyber until 12/10/23 to meet the demands. Here’s how Kyber responded ⬇️

🔐 What Happens Next?

Kyber has promised to reimburse all user funds that have been lost - and appear to be unwilling to negotiate with the hacker. Good for them. Although, next time, they should audit their code a little closer.

🌍 El Salvador's Bitcoin Strategy: A Bold Experiment

El Salvador's journey with Bitcoin has been one of ambition and controversy, marked by ups and downs that reflect the volatile nature of the cryptocurrency world.

📅 Making History with Bitcoin

• Historic Move: In September 2021, El Salvador became the first country to adopt Bitcoin as an official currency, a move that grabbed global attenti​on.

• Multiple Objectives: The government's decision aimed at financial inclusion, boosting public treasury revenues, and enhancing the president's reputation.

💻 Implementation and Challenges

• Bitcoin Purchases: The government began accumulating Bitcoin, but the exact amount is not publicly known.

• Chivo Wallet: A digital wallet called Chivo was introduced, giving every citizen $30 in Bitcoin.

💵 Economic Impact and Public Response

• Adoption Rates: Despite the pioneering move, the adoption of Bitcoin in everyday transactions has been limited. Most Salvadorans still prefer transactions in USD due to its stability compared to Bitcoin's volatility.

• Treasury: The treasury of El Salvador has been accumulating Bitcoin, with no plans to sell or slow down. I think this bet will pay off big as bitcoin continues to appreciate.

📈 Current State of the Bitcoin Bet

• Profitable Turnaround?: As of late, President Nayib Bukele announced that the country's Bitcoin investment turned profitable by over $3 million following a crypto rally.

🔍 Analysis and Future Outlook

El Salvador's Bitcoin strategy represents a bold and unprecedented move in the global financial landscape. As more countries follow suit, the demand for Bitcoin will to continue to soar. You should pick some up, before it’s too late!

That’s all for today! Go buy some bitcoin, and don’t forget to self custody.

Thank you for reading Make Crypto Simple.

Sincerely,

Chris Schawel


^{The content provided in this newsletter is for entertainment purposes only and should not be construed as financial advice. All information, including but not limited to market analysis, price predictions, and investment strategies, is purely speculative in nature. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. We are not responsible for any losses incurred as a result of the information presented in this newsletter.}