This vulnerability was found in their system that lets them draft smart contracts. This exploit allowed the hacker to exchange one cryptocurrency token for another of the same type but for a different value, which should be impossible. For some, one of the biggest appealing factors of cryptocurrency is the lack of a central governing body. With normal currency, the government can impose taxes and fees onto transactions, but cryptocurrency has no such body. This, however, means that there is little to no law when something does go wrong. An internal accounting error within MonoX Finance let the culprit inflate the price of the MONO token and then use it to cash out $31 million worth of Ethereum and Polygon tokens. This was done by altering the sell price without changing the buy price, meaning that the transactions were weighed heavily in their favor. This exploit was allowed to happen specifically due to a feature known as Smart Contracts, which are essentially automated scripts that are activated under certain conditions. However, since these scripts are automated, there is no human to look at each case and gauge whether it’s a good idea or not, meaning that they can be manipulated under the right circumstances. While this attack is enormous, it’s not the first to occur under similar circumstances. Similar attacks have occurred to other financial firms that deal in cryptocurrency, like Indexed Finance losing $16 million due to index pool management. However, this is a bit of a double-edged sword. While not having to live under regulations sounds nice, that means when something like this happens, the legality of the whole situation is far grayer than it would be if someone had robbed a bank or government building. The more things like this happen, the more that governments will likely be pressured to impose stricter regulations on the world of cryptocurrency in general. In fact, federal bank agencies issued a statement outlining their 2022 roadmap in regard to cryptocurrency regulation. The relevant agencies stated that they were looking to: What this means is still slightly up in the air, but it’s a borderline guarantee that the crypto world is headed for more federal regulation, despite the fact that a large portion of the crypto user base is likely opposed to this development. However, if it stops multi-million-dollar attacks from taking place, then it’s hard to argue against regulations too strongly.
