Magic Internet Money loses its sparkle as DeFi platform hacked for $6.5M

Abracadabra Finance, the platform behind stablecoin Magic Internet Money (MIM), was hacked for approximately $6.5 million on Tuesday, causing MIM to depeg.

According to data from CoinMarketCap, the $100 million market cap stablecoin briefly hit $0.76 before rebounding due to the team’s efforts to restore the token’s price.

The Abracadabra treasury used over 900,000 USDT to market buy MIM, sending the price back to around $0.95 where it remains at the time of writing.

While yet to be officially confirmed, the attack appears to have been caused by a rounding error in Abracadabra’s CauldronV4 smart contract code, which allowed the hacker to drain assets from the platform. Following the hack, the attacker sold off a total of 2.3 million MIM for ETH, causing the sudden drop in price.

Solidity developer Anton Cheng claims to have investigated the attack vector back in September 2023, but eventually decided to chalk it up to a false positive when no profitable way to pull off a hack was found.

The attacker funded their address via crypto-mixing service Tornado Cash, whose founders have been embroiled in legal troubles since the project was sanctioned by the US Treasury in 2022.

Read more: Why didn’t the DoJ charge the third co-founder of Tornado Cash?

Abracadabra is one of a number of decentralized finance (DeFi) projects either co-founded or otherwise closely linked to Daniele Sestagalli. Another of these projects, Wonderland, was run alongside convicted fraudster Michael Patryn, whose identity (which was known to Sestagalli) was revealed almost two years ago by on-chain investigator ZachXBT.

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