The incident happened on May 14, around 10:30 pm UTC, and was detected by Web 3.0 security firm Cyvers.
Sonne Finance, a decentralized lending protocol suffered an attack on Wednesday that led to the loss of $20 million. This triggered a 60% loss in the value of its native SONNE token. At the time of this writing, SONNE was trading at $0.02616, down 60%, marking its lowest level in the past year. The price dip has also impacted the market capitalization of the token, cutting it to $20 million.
Sonne Finance Hacker Exploit Donation Feature
The bad actors behind the attack exploited a “donation” feature to perpetrate the crime. They manipulated some pairs offered by the platform and succeeded in stealing different tokens before the act was discovered and finally intercepted. The protocol had just introduced token markets for Velodrome Finance’s VELO in response to a recent community proposal.
This led to the enforcement of a two-day timelock which the attacker leveraged to perform four transactions including creating markets and adding collateral factors. For context, a timelock contract is an in-built smart contract in a blockchain that facilitates the execution of a transaction at a specific time. In the case of Sonne Finance, the specific time was two days after it was locked.
The perpetrator of the attack donated huge amounts of crypto assets to manipulate the exchange rate between two tokens. Unfortunately, this was enough to trick the platform into believing that there was more than enough collateral, a false narrative.
The incident happened on May 14, around 10:30 pm UTC, and was detected by Web 3.0 security firm Cyvers. It wasn’t until after 25 minutes into the exploit that Sonne Finance became aware. The Optimism blockchain version of the Sonne Finance platform was directly affected by the exploit but the Base version was not.
Most of the stolen cryptocurrencies were Sonne Finance’s USD Coin (USDC), Wrapped Ether (WETH) contracts, Velo (VELO), soVELO, and Wrapped USDC (USDC.e). The attacker later converted $8 million worth of these digital currencies to Bitcoin (BTC) and Ethereum (ETH) and transferred them to a new wallet address.
Sonne Finance Launch 10% Bug Bounty For Hacker
Consequently, Sonne Finance took to X to announce that “all markets on Optimism have been paused”. Sonne Finance has partnered with Cyvers to investigate the situation further. Furthermore, the protocol has informed users that they are actively working on retrieving the siphoned cryptocurrencies.
A bug bounty which allows the hacker to keep 10% of the loot as a reward for spotting a vulnerability, has also been announced as an offer for the hacker. However, the decision to move $8 million in digital assets to a new wallet, suggests that the bad actors may not succumb to negotiation.
The news of the Sonne Finance attack comes only a week after European authorities apprehended six individuals in Austria linked to a crypto scam. The scammers deceived investors out of £6 million worth around $6.5 million. Law enforcement involved in the case have confiscated assets belonging to the scammers, including two vehicles, a property valued at EUR 1.4 million ($1.5 million), and EUR 750,000 in cash.
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