Inside Job Suspected in Frax Finance Hack Resulting in FRAX USD Account Loss

  • Sam Kazemian, founder of Frax Finance, has claimed that an insider at X was behind the recent hack of their official account.
  • The incident took place on June 1, causing the decentralized stablecoin protocol to lose administrative control over their X account.
  • “This was an inside job,” Kazemian emphasized, indicating no faults in Frax Finance’s security protocols.

Discover how an alleged insider compromise at X platform led to the hack of Frax Finance’s official account. Learn about the investigation and impacts of such breaches on the crypto community.

Frax Finance Account Breached

In a June 3 Telegram post, Kazemian stated that the Frax Finance team has “reasonable certainty” about the culprit, described as a “known scammer” by blockchain investigator ZachXBT. Kazemian stressed that this breach was not due to phishing or security weaknesses within Frax Finance but stemmed from insider activities within X.

“We will try our best to bring that person to justice,” Kazemian shared. Following the compromise, he reached out on X, urging contacts to facilitate communication with X’s customer service. He warned users to avoid clicking any suspicious links, hinting at potential social engineering.

If anyone has a direct line to X account/customer service please DM me, @fraxfinance X account is compromised and appears to be inside job or social engineering within X since no password reset or other issues within Frax itself. Please stay safe and don’t click any X links!

— Sam Kazemian (¤, ¤) (@samkazemian) May 31, 2024

Despite the breach, no passwords were altered, and no internal security flaws were found. Kazemian specifically pointed to social engineering tactics and insider collusion at X as the cause. Since the hack, Frax Finance’s X account has remained inactive, while neither X nor its CEO, Elon Musk, have officially commented on the situation.

A user on X highlighted the need for enhanced cryptographic authentication tools on the platform to retain its credibility within the crypto community.

Insider Bribes and Market Manipulation

The breach at Frax Finance is part of a troubling trend of crypto-related hacks linked to insider actions at X. A crypto trader named GCR reported a similar attack on his X account in late May.

“Was notified 2 months ago by someone affiliated with twitter that bribes had been made to get access to my account, and beefed up security then. But there can’t be any security if X employees take money for admin access,” GCR stated.

GCR revealed that his account was compromised through bribery, subsequently used to promote a pump-and-dump scheme involving ORDI and LUNA2 assets.

1/ An investigation into how the @sol ($CAT) meme coin team is connected to the @GCRClassic hack from last night.

Minutes before the hack an address tied to them opened $2.3M ORDI & $1M ETHFI longs on Hyperliquid.

Let’s dive in. pic.twitter.com/009BdPBfM1

— ZachXBT (@zachxbt) May 27, 2024

Blockchain investigator ZachXBT suggested that developers behind the Solana-based meme coin CAT might have facilitated GCR’s hack. Although it isn’t confirmed whether the same group was responsible for the attack on Frax Finance, the patterns suggest coordinated efforts.

Conclusion

The recent breach of Frax Finance’s X account highlights significant security vulnerabilities within the platform, attributed to insider threats and social engineering. This incident underscores the need for improved internal protocols and advanced cryptographic measures in the crypto space. As investigations continue, the crypto community must remain vigilant and advocate for stronger security standards to prevent future compromises.

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Gideon Wolf
Gideon Wolfhttps://en.coinotag.com/
GideonWolff is a 27-year-old technical analyst and journalist with extensive experience in the cryptocurrency industry. With a focus on technical analysis and news reporting, GideonWolff provides valuable insights on market trends and potential opportunities for both investors and those interested in the world of cryptocurrency.
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