Crypto Quill

Cryptocurrency exchanges Bitfinex and Binance have successfully prevented a huge exploit attempt involving Ripple’s XRP. The incident, which could have had devastating consequences for the crypto market, involved an attempted transfer of $15 billion worth of XRP, nearly half of the token’s market capitalization.

How the exploit attempt was blocked

According to reports, the malicious actor tried to take advantage of a feature of the XRP Ledger called Partial Payment. This feature allows the sender to specify a different amount of XRP to be delivered than the amount that is deducted from their account. The sender can also set a flag to indicate that the transaction is a partial payment.

The exploit attempt involved sending a partial payment of a few cents, but setting the flag to indicate that the transaction was for 25.6 billion XRP, which is half of the circulating supply. The attacker hoped that the recipient exchange would not check the delivery_amount field and credit the sender’s account with the full amount of XRP.

However, both Bitfinex and Binance were able to block the exploit by properly handling the delivery_amount field and verifying the actual amount of XRP that was delivered. The Chief Technical Officer of Bitfinex, Paolo Ardoino, explained the true nature of the attack on Twitter and praised the XRP Ledger for recognizing and blocking the exploit attempt.

The implications of the exploit attempt

The exploit attempt was initially reported by a blockchain tracking account, but it misreported the actual amount of XRP involved. Community members quickly corrected the misinformation and clarified that the transaction was only for a few cents. Moreover, they pointed out that the transaction could not have been executed because of insufficient liquidity on the sender’s end.

The exploit attempt was also believed to have targeted Binance with a transfer of 58.9 billion XRP, which is more than the total supply of XRP. The attempt also failed, but it raised some concerns about the security of the crypto ecosystem. While Bitfinex and Binance were able to block the exploit, there is no guarantee that other platforms would have done the same. A failure to read the data field could have cost the network and its users a lot of funds.

The market capitalization of XRP exceeds $31 billion. The tokens in question were worth roughly half of it. Furthermore, the same fraction of the circulating supply was exploited. XRP has not been doing well in the last 30 days. It is trading at $0.5749 at the time of writing this article. That is a drop of 0.98% in the last 24 hours and 7.50% in the last 30 days. The value has slightly hinted at bullish signs, but only if one looks at the changes in the last 7 days, for the increase is 1.90%. The market cap and 24-hour volume of XRP are down by 1.04% and 11.40%, respectively.

The history of Bitfinex security incidents

This is not the first time that Bitfinex has faced a security incident. In November 2023, Bitfinex reported a minor security breach due to a phishing attack that affected several users between October 30, 2023, and November 5, 2023. According to Bitfinex, the impact was minimal, with no major damage.

However, the most notorious security incident that Bitfinex suffered was in August 2016, when hackers stole 120,000 bitcoins, worth about $72 million at the time, from the exchange’s hot wallets. The theft resulted in a 36% loss for all Bitfinex users, who were compensated with BFX tokens that were later redeemed or exchanged for equity in the company.

Bitfinex has since improved its security measures and implemented a multi-signature cold storage system to protect its funds. The exchange has also partnered with Chainalysis, a blockchain analysis company, to monitor and prevent illicit transactions on its platform.