zkLend Offers 10% Reward to Hacker in Attempt to Recover Stolen Funds
The decentralized lending protocol zkLend, built on Starknet, has been the target of an attack resulting in a loss of over $9 million. In a negotiation attempt with the hacker, the project’s team has offered to let them keep 10% of the stolen funds as a ‘white hat’ reward, on the condition that they return the remaining 3,300 ETH, valued at $8.4 million.
Major Attack on the Starknet Loan Protocol
Following this exploit, zkLend immediately suspended withdrawals to prevent further fund leaks. The protocol team is currently conducting an in-depth investigation to identify the vulnerability that allowed this attack and understand the techniques used by the hacker. Though details of the exploit are unclear, the attack is speculated to have exploited a vulnerability in the smart contract code, a common method in DeFi hacks.
Launched in 2022, zkLend had raised $5 million in a funding round led by Delphi Digital, with participation from Three Arrows Capital and StarkWare.
Attempt at an Amicable Settlement
In order to recover the funds without resorting to legal action, zkLend sent a direct message to the hacker via the blockchain. In this statement, the protocol pledges to drop any legal pursuit if the hacker agrees to return 90% of the stolen assets.
Often employed in negotiations with hackers, this approach aims to incentivize them to return the funds rather than risk being tracked down by authorities and blockchain analysis firms.
Active Monitoring of Stolen Funds
Meanwhile, zkLend is closely monitoring the movement of the funds in collaboration with other stakeholders in the crypto space. The protocol hopes to identify the attacker if they attempt to launder the stolen ETH through mixing services or centralized exchange platforms.
Following this attack, zkLend’s Total Value Locked (TVL) plummeted to $1.2 million, with $14.6 million in borrowed funds on the Starknet network, according to DeFiLlama data.
