Binance Labs-backed decentralized finance (DeFi) asset management protocol Velvet Capital made a quick move to protect its users, forcing its website offline on April 23 to prevent a major phishing attempt. This incident highlights the cybersecurity threats constantly lurking in the DeFi space.
Alarm on Binance supported platform
The issue started when members of the crypto community on platform X reported unusual activity on Velvet Capital’s trading platform. Users attempting to connect to the platform were unexpectedly asked to confirm wallet access, a red flag that immediately raised suspicion.
Velvet Capital responded immediately, launching an internal investigation and issuing a cybersecurity alert. This warning advised investors to decline all wallet connection requests from the app until further notice. The platform has also completely disabled the app as a precaution to minimize possible losses to its users.
Announcement from the founder
Vasily Nikonov, founder of Velvet Capital, announced the closure of the website on Telegram and urged users to refrain from interacting with the platform. He assured the community that the website shutdown was for maintenance and investigation purposes and promised to provide a detailed report (autopsy) once the issue was resolved.
The situation escalated further when blockchain research firms Blockaid and Scam Sniffer confirmed that a website had been hacked before Velvet Capital’s official announcement. This statement underlined the urgency of the situation and potentially left some users vulnerable. According to Nikonov, any user who confirmed a transaction on Velvet Capital since 05:39 UTC April 23 may be a potential victim of cybercrime. To address this concern, he advised them to open a support ticket on Discord and share the transaction details with the Velvet Capital team for resolution.
No loss of any money
In a reassuring message, Nikonov emphasized that the core functionality of the platform (smart contracts) is not affected. He emphasized that user funds held on Velvet were safe and that the team was diligently investigating the front-end issue that some users encountered earlier that morning. He promised to share the results of the investigation as soon as possible.
Fortunately, as of 06:50 UTC, Nikonov reported that no users had reported any loss of funds. This is a positive development, but a reminder of the importance of caution in the DeFi space. This event, cryptokoin.com As we reported on November 28, 2023, DeFi protocols bear a disturbing resemblance to the front-end attacks that plagued Aerodrome and Velodrome. Just like Velvet Capital, both platforms issued similar warnings on platform X, urging users to avoid interacting with their platforms while investigations are ongoing. continues.
According to blockchain researcher ZachXBT, these attacks resulted in the theft of approximately $40,000 worth of crypto assets. The Velvet Capital incident serves as a cautionary tale for all DeFi users. It underscores the critical need to stay informed about potential threats and use extreme caution when interacting with DeFi platforms.
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