Reclaiming Stolen USDT And USDC Tokens
Following the BNB Cross-Chain Bridge attack in 2022, the BNB Chain Core has proposed a plan to reclaim the collateral from the exploiter who breached the protocol. However, it plans to use the reclaimed funds to pay off debts without selling BNB tokens on the market.
Thus, it can prevent any disruption to the BNB market. The proposal is part of a detailed roadmap to minimize the Venus protocol’s losses. According to a recent report, the exploiter’s account contains approximately 630,240 BNB.
The exploiter also borrowed 37,440,000 USDC and 58,440,000 USDT. Furthermore, the BNB Chain Core strategy outlines steps to recover what was taken and ensure that those who suffered losses are compensated.
This comprehensive plan demonstrates a commitment to resolving the issue to minimize market impact while prioritizing debt repayment.
According to the proposed move, the first step to access the BNB supply is to settle the outstanding debt. The proposal suggests using the forced liquidation mechanism and delegating authority to the BNB Chain to conduct critical operations.
It also outlines five specific steps for carrying out these processes. Nevertheless, the primary objective is to enable forced liquidation of the exploiter’s position.
This step entails liquidating the exploiter’s entire USDT and USDC positions. Any remaining BNB following the liquidation will be returned to the bridge.
Moreover, the proposal also revealed the exploiter’s acquisition of 128,666.39 XVS tokens via emissions. However, the XVS tokens assigned to the exploiter’s account would be claimed by the BNB Chain Core, seized, and redirected to the Venus treasury.
The move intends to recover the assets required to settle the debts and retrieve the misused tokens.
The plan also revealed that the liquidation fees generated during this process will be used efficiently. Furthermore, if the amount left over after paying off the exploiter’s debt is sufficient, it will cover any remaining deficit.
However, if the remaining funds fall short of covering the entire deficit, Venus will draw from the risk fund to make the difference.
An Exploit That Halted Operations
Recall that the October 2022 breach caused the BNB Smart Chain (BSC) to halt temporarily, allowing the exploiter to acquire $566 million in BNB.
However, they could only transfer $137 million successfully to other chains. In addition, the perpetrator used Venus to maximize 900,000 BNB as collateral for loans in various stablecoins, including USDT and USDC.
This abuse and exploitation of the system resulted in a significant imbalance in owed debts, necessitating the current recovery plan to correct the situation. The October 2022 exploit on the BNB Coin ecosystem caused fears across the entire crypto industry.
Following the unfortunate incident, the network halted all transactions on the chain. The latest move is part of the protocol’s ongoing efforts to restore robust security on the platform and avoid further losses.
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