By James Davis
Forta, a Web3 security company that monitors on-chain assets for firms like Compound, Polygon, ZenGo, and Lido, has revealed that it saw an incoming attack on Euler Finance before the Decentralized Finance (DeFi) got hacked, losing over $198 million in the process.
According to Forta’s researcher Christian Seifert, the company’s machine learning models detected the hack, and the team immediately gave Euler Finance the heads up. However, despite being aware of the impending attack, the protocol did not manage to prevent it. The crypto lending platform would later resort to negotiating with the attacker. Fortunately enough, the two parties came to an agreement, and the hacker returned the funds.
The Downside of AI Technology
Launched in 2021, Forta has so far raised $23.5 million. Some of its prominent investors include Blockchain Capital, Coinbase Ventures, and Andreessen Horowitz. While the firm uses its machine learning to detect malicious activities on a blockchain, there are several downsides of AI (Artificial intelligence). For example, Seifert says criminals are using AI technology, like the popular ChatGPT, to initiate phishing attacks. He claims that these criminals feed their targets’ LinkedIn profiles to ChatGPT and then instruct it to author a customized email. After that, they add scam links to the email, which may lead to victims losing their personal information and funds.
Meanwhile, Scott Gralnick, the director of Halborn cybersecurity company, which raised $80 million in funding last year, admits AI technology has created a double-edged sword in the sense that there will always be people trying to use it to stage attacks while others will utilize it in protecting ecosystems and companies.
Microsoft is among the companies using AI technology to foster security. The firm has developed a chat service called Security Copilot, which lets users ask any questions regarding security incidents and receive answers on mitigating the risks. Seifert says he expects employees in cybersecurity companies to use such technology to their advantage.
Could AI Technology Replace Humans?
However, Pew Research’s recent report shows that most employees fear AI technology will replace them in the next twenty years, something that Seifert disagrees with. He argues that AI isn’t designed to replace humans but is a tool meant to support them. Seifert says humans will always be needed to verify some of the decisions made by AI.
That said, it’s every crypto player’s wish that AI technology will help reduce the growing incidents of hacks. At the start of this month, research company Immunefi revealed that attacks increased 191% year-over-year. Just last week, Taylor Monahan, the founder of MyCrypto, an Ethereum wallet manager, disclosed that a hacker has stolen over 4,500 ETH from various users since December 2022, and no one could figure out how they managed to execute the exploits.