Hedgey Finance, a decentralized finance (DeFi) platform known for supporting decentralized autonomous organizations (DAOs) with token distribution services, has become the latest victim of a significant cyberattack. 

According to reports from Cyvers Alerts and blockchain security firm CertiK, Hedgey Finance was exploited for a total of $44.7 million across the Arbitrum and Ethereum blockchains.

Details of the Attack

The attackers targeted vulnerabilities within Hedgey Finance’s on-chain token infrastructure protocol. Using the ‘createLockedCampaign’ function, they leveraged flash-loaned funds to gain authorization for token expenditures from the victim contract. 

This breach led to the loss of USDC, NOBL, and MASA tokens. Following the theft, the attackers converted the stolen assets into DAI through sales.

Breakdown of Losses

• Arbitrum Chain: The attackers executed their scheme on the Arbitrum chain, extracting around $42.8 million. As per reports, exploiters already deposited $110K to Bybit.

• Ethereum: On the Ethereum network, approximately $1.9 million was siphoned off by the same exploit.

Hedgey Finance reported on the attack via the social media platform X, warning users with active claims in the Hedgey Token Claim Contract to cancel them to prevent further losses. 

The platform is reportedly investigating the incident and likely working on measures to prevent future attacks.

Wider Impact on the DeFi Sector

This incident is part of a broader trend of increasing attacks on DeFi platforms. According to Cyver Alerts, the total stolen value in the first quarter of 2024 reached approximately $739.7 million, highlighting a significant risk in the DeFi ecosystem. 

Notably, Ethereum remains the most targeted blockchain, suffering the majority of the total value lost in attacks during this period. The Bitcoin network and Binance’s BNB Chain also reported major incidents.

Despite having fewer attacks, February witnessed a disproportionately high financial impact with about $405.3 million lost.