Solana Suffering Yet Another Setback With Wallet Hacks
Over 8,000 wallets were drained in a matter of minutes with an unconfirmed total of $7 million siphoned by the hackers. With roughly $6 million stolen within a 10 minute time frame from Phantom wallets, it is likely that the dollar amount of the stolen funds will increase in the near future.
It is yet to be confirmed, as it seems even the Solana dev team are unsure of what is happening, that the initial hack was due to a wallet app called Slope. The seed words for Solana wallets on the app are reported to have been stored in plain text rather than encrypted.
Essentially, Slope engineers had direct access to all user seed words. However, there is currently no evidence that the hack occurred within the company.
Another claim by Twitter user @watcherguru states that all Layer two coins were also in trouble: “As mentioned, the attacker has orchestrated a mass private keys exploit and steal native tokens (SOL) and SPL tokens (USDC) from hot wallets. Most targeted wallets have been inactive for more than 6 months, and the likes of Phantom and Slope wallet holders have suffered.”
Hot wallets (generally an app on a phone) are easier to target than cold wallets (hardware wallets) due to their more frequent connection to the internet.
Kyle Samani, a Venture Capitalist behind SOL, was known for advocating a “move fast and break things” culture. This is evident in SOL’s history of issues. Only a few months ago was the SOL network halted to unwind a position by a whale in order to prevent the SOL ecosystem from collapsing. This was done through a public “vote,” but over 75% of the vote came from one entity.
Chamath Palihapitiya is another VC who mentioned he was heavily invested in SOL on a podcast where he boasted about “dumping his bags” on other VCs (and retail).
Forced network freezes to protect whales and other large investors, sporadic network shutdowns, and recent wallet hacks have all attributed to very low expectations from users online for SOL’s future.
Samani and Tushar Jain, both leaders of the SOL project, have avoided confrontation on SOL’s recent issues. Samani has been quiet toward the public while Jain has been deflecting blame.
While this is still an ongoing investigation, it is known that the Phantom and Slope wallet users were the selected targets for this catastrophe.
Solana, which has started the summer by creating brick and mortar stores, has not had a great SOL summer.