The founder of decentralized finance (DeFi) protocol dYdX, Antonio Juliano, has provided insights into the investigation surrounding the loss of $9 million in insurance funds on November 17, dismissing rumors of an exit scam and stressing the involvement of central components in the v3 chain.
Taking to X (formerly Twitter), Juliano clarified that the dYdX chain itself was not compromised. Instead, the insurance claims of $9 million occurred on the v3 chain, where the insurance fund was utilized to address gaps in liquidation processes related to the Yearn.finance (YFI) token market.
Highlighting the protocol’s commitment to resolving the incident transparently, Juliano stated that dYdX had no intentions of negotiating with the exploiters responsible for the attack. Instead, the platform plans to offer bounties to individuals providing valuable assistance in the ongoing investigation. Juliano emphasized this approach, stating, “We will not pay bounties to, or negotiate with the attacker. We and others have made significant progress in identifying the attacker. We are in the process of reporting the information we have to the FBI.”
The founder pointed out that the exploited v3 chain involved central components, which are being scrutinized for their potential role in the compromise. The security incident led to a 43% drop in the YFI token’s price on November 17, sparking concerns within the crypto community and fueling speculation about a potential exit scam.
The exploit specifically targeted long positions in YFI tokens on the dYdX exchange, resulting in the liquidation of nearly $38 million worth of positions. The significant trade contributed to wiping out over $300 million in market capitalization from the YFI token. The aftermath of the incident led to theories of an insider job within the crypto community.
While security breaches in DeFi are not uncommon, dYdX’s unique approach of involving the community in identifying the culprit, rather than directly paying a bounty to the exploiter, sets a novel precedent in the space. The active involvement of the FBI in the investigation adds a layer of regulatory scrutiny to the incident.
My professional background is in public relations and I am the founder of Cryptochating. My journey into blockchain technology started four years ago, and I haven't looked back since then. The future of decentralized technology is incredibly fascinating to me, and I am passionate about communicating how it will change the world.