A hacker was able to exploit a significant software flaw in Bisq, a decentralised exchange (DEX), to steal around $250,000 worth of cryptocurrency from users, the exchange said in a blog post on 8 April.
According to the announcement, the developers behind the peer-to-peer exchange found the “critical security vulnerability” Tuesday night, and had to abruptly disable the trading on the platform. Before the exchange used the alert key, the attacker was able to steal approximately 3 BTC and 4,000 XMR from 7 different users. The exchange further said:
“To clear confusion: yes, Bisq is a proper distributed peer-to-peer network. So you can override the latest alert key functionality that blocks trading. But we highly discourage you from doing this for your own security.”
The exchange further clarified that the exploit was a flaw in the way trades were carried out on the platform, and no the way funds were stored. The attacker was able to alter the default fallback addresses of users, where crypto was sent if a trade failed. He then pretended to be a seller, and start a trade with a buyer, and simply wait for the time limit to run out, at which point the funds were sent to the attacker’s address.
According to the exchange, the flaw was part of a trade protocol, updated in late October 2019, which was meant to improve decentralization, and remove trusted third parties from the platform. The exchange was able to release a hotfix, which removed the vulnerability, by 12:00 UTC Wednesday.
The exchange has further stated that it will soon create a proposal in the Bisq DAO, which will be aimed at repaying the seven victims of the hack.
Previously known as Bitsquare, Bisq was release on a testnet back in 2018 as a decentralized autonomous organization (DAO). Though the exchange operates as many other DEX’s, it does not require a registration or identity verification, which allows its users to trade anonymously.