Ethereum price falls after hackers begin laundering $100 million bridge exploit

Crypto bridges enable the transfer of tokens between different blockchains, but can provide hackers with opportunities.

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Key points
  • The Ethereum price is down overnight 
  • Hackers have begun to launder the US$100 million worth of ether stolen from the Horizon bridge last week 
  • The cyber thieves stole a range of altcoin before swapping them into Ethereum 

The Ethereum (CRYPTO: ETH) price is down 4% over the past 24 hours, currently trading for US$1,145 (AU$1,655).

The overnight decline puts the world's number two crypto by market cap down 70% since 1 January.

And it comes as news emerges that the hackers who stole US$100 million in cryptos from the Horizon blockchain bridge last week have begun to launder their ill-gotten virtual gains.

a man with his back facing the camera sits at a computer displaying a screen of code with an electric power contraption on the desk near him as he sits in concentration while appearing to mine cryptocurrency.

Image source: Getty Images

How the hack unfolded

Last Thursday, Harmony (the company behind Horizon) reported the brazen theft from its bridge. At the time the Ethereum price was around 2% higher than current levels.

If you're not familiar with the term, in the digital world bridges enable you to transfer cryptos between different blockchains. And last week's theft isn't the first time hackers have exploited weaknesses in bridges' security protocols to swipe millions of dollars' worth of cryptos.

In a tweet last Thursday Harmony said:

The Harmony team has identified a theft occurring this morning on the Horizon bridge amounting to approx. $100MM. We have begun working with national authorities and forensic specialists to identify the culprit and retrieve the stolen funds.

The company also offered a hefty reward, later tweeting, "We commit to a $1M bounty for the return of Horizon bridge funds and sharing exploit information."

And they upped their bridge security:

We have migrated the Ethereum side of the Horizon bridge to a 4-of-5 multisig since the incident. We will continue taking steps to further harden our operations and infrastructure security.

That means every transaction will require four out of five (or all five) private keys before authorisation.

Ethereum price slips as virtual laundering begins

In the latest news, Decrypt reports that the hackers have begun to launder their virtual loot.

Cyber security company PeckShield revealed that the thieves sent three transactions from the same address used in last week's hack to Tornado Cash, a crypto mixing service. By pooling large amounts of tokens together, services like Tornado enable people to mask the origins of their cryptos.

In total, they sent some 30,000 ether, approximately US$34.4 million at the current Ethereum price. That's about a third of their total take.

In last week's hack, the cyber criminals stole a range of altcoins from the bridge before swapping them for Ethereum.

If the Ethereum price were trading at November's all-time highs, the 90,000 stolen tokens would be more than US$440 million.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum. The Motley Fool Australia has positions in and has recommended Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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