Crypto lender Polter Finance halts operations after $12M hack

Polter Finance, a decentralized non-custodial lending and borrowing platform, paused its operations and involved law enforcement after a hack drained its total value locked (TVL) of $12 million.

On Nov. 17, Polter Finance paused its platform after identifying an exploit and notified investors on X. The protocol investigated the stolen funds and traced them to wallets on the crypto exchange Binance. 

Source: Polter Finance

According to Web3 security firm TenArmor, the Polter Finance protocol lost $12 million because of a faulty oracle price-related flash loan attack on its newly launched SpookySwap (BOO) market.

Polter has yet to confirm the nature of the attack. In the meantime, Polter Finance reached out to the hacker via an onchain message , offering scope for negotiation and impunity. 

Polter Finance negotiates with the hacker through an onchain message. Source: Polter Finance

The hacker had not responded at the time of writing. The pseudonymous founder of Polter Finance, known as Whichghost, filed a police report with Singapore authorities the same day. The police authenticated Whichghost’s identity using Singpass, a digital identity for Singapore citizens and residents.

Source: whichghost

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According to the police report, Polter Finance lost more than 16.1 million Singapore dollars ($12 million) worth of crypto. This included $223,219 in personal losses for Whichghost, who stated:

“I wish to state that I did not provide anyone my login details (private keys) and I believed that my platform’s newly deployed smart contract (for BOO token lending) has been exploited, hence causing the unauthorized transactions.”

The BOO market, which enabled the $12 million hack, had a valuation of only $3,000.

Despite the company’s efforts, many community members on X expressed skepticism, with some suggesting the incident could involve insider activity. Critics pointed to the filing of a police report as a potential distraction from internal scrutiny.

Polter Finance later announced a partnership with the Security Alliance Information Sharing and Analysis Center (SEAL-ISAC) to help track down the attacker.

Polter market size. Source: Polter Finance

Polter Finance had a total market size of $12 million, comprising $7.87 million of Fantom ( FTM ), $1.03 million of wrapped USD Coin ( USDC ), $251,000 of Magic Internet Money (MIM) and $2.1 million of Stader sFTMX, among others.

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