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The world of cryptocurrency has witnessed another hack attack, adding to the list of incidents. A stablecoin protocol named Seneca became the victim of a destructive hacking incident. During the attack, funds exceeding 6 million dollars were stolen from the protocol’s networks on both Ethereum (ETH) and Arbitrum (ARB).
Over 1900 ETH Stolen from the Protocol
The hack attack that struck the Stablecoin protocol Seneca originated from a flaw in the smart contract approval mechanism, which malicious actors exploited to withdraw funds worth over 6 million dollars from the protocol. It is estimated that the attack resulted in the theft of funds equivalent to over 1900 ETH from the protocol.
Security analysts from Blocksec pointed out the root cause of the hack as an “arbitrary call issue” in Seneca’s smart contracts. Unlike some other protocols, Seneca’s smart contracts did not have an option for the team to pause them in emergencies. Instead, users had to manually revoke permissions, which delayed addressing potential security vulnerabilities.
The attackers exploited this security flaw to perform unauthorized token transfers from Seneca’s smart contract to an external wallet under their control. Lei Wu, Chief Technology Officer at Blocksec, stated that the hack’s primary cause was the arbitrary call issue that allowed the transfer of approvals to the vulnerable smart contract.
Immediately following the discovery of the hack, the Seneca team confirmed the attack and invited users to revoke all previously granted permissions to prevent further unauthorized transactions.
senUSD’s Price Plummets
Seneca, which also operates as a decentralized finance (DeFi) project, offers users the ability to mint and borrow its own stablecoin, senUSD, against other cryptocurrencies through a mechanism known as collateralized debt positions.
Indeed, following the hack, there was a significant drop in the value of Seneca’s senUSD, which fell from around 0.1 dollars to below 0.04 dollars, losing over 60% of its value. This sharp decline in the altcoin’s price underscores the severity of the hack and its impact on investor sentiment surrounding the Seneca protocol.
