515M NIGHT Moved: What We Know About the Wanchain Bridge Incident

[00:00:00]And we noticed an anomaly from the Binance Smart Chain side to the Cardano side where ADA associated with Binance and uh the one chain bridge was being rapidly dumped as quickly as possible on the Dexes of Cardano. Uh so after a brief investigation, it became clear that it looked like the one chain bridge had become compromised. Uh, [music] Midnight and the smart contract for the Midnight token on the Cardano network are operating just [music] fine, running 24/7. No incidents or issues. Glacier Drop is continuing and none of Midnight's infrastructure has been hacked and nothing on the Cardano side related to Midnight has been hacked. It [music] appears that this is completely localized to One Chain's infrastructure.

[00:00:53]uh this requires more vigilance. [music] Now from Cardano's standpoint, we predicted that these things were going to happen. Uh formal methods, peer review, these things, they're not buzzwords. They considerably reduce the set of attack vectors that are possible in an [music] ecosystem. Bridges are the most vulnerable of all of these attacks in the cryptocurrency space. Guys, we got some absolutely crazy news at the moment. And I woke up to this headline here. And this is the night token dropping 30 uh up to 50% in 24 hours.

[00:01:26]Not even 24 hours, about 12-hour period.

[00:01:29]The it looks like there had been an exploit on a smart contract that was attached to one chain. And from there, 515 million night tokens had been moved to the Kadana ecosystem. And this particular attacker uh exploer is liquidating all those assets at the moment. and it's still ongoing at the moment. So, we really need to make sure we follow the updates here from the Midnight Foundation to find out what's going on. Now, it's very important to note that this isn't a direct exploit on the Kadano ecosystem or on the Midnight network itself. Uh, so it doesn't appear to be an exploit from any of the smart contracts there. And it may very well be on the one chain side itself, which is really, really concerning. uh but we'll get more information about that as uh the various teams investigate what's going on and action is being taken. So this is the announcement from the Midnight Foundation. We are aware of reports concerning an incident involving the one chain Kadano to BNB bridge affecting bridge night. Based on information currently available appears to relate to crosschain bridge operations and not the midnight network itself. We are actively monitoring the situation and working with relevant partners to establish the facts. We encourage the community to rely on only only on official updates and to remain vigilant to fishing attempts and impersonation scams while investigations are ongoing. So the good thing here doesn't look like it is attacking people's wallets. So retail isn't being affected here, but it's affecting the smart contract uh that is holding up the B&B bridge. So, if I'm sure if we look at the bridge assets over on B&B as well that that particular side of things uh would be drastically affected. So, any any of those wrap tokens over there, they're pretty much worthless at the moment. But let's have a look at what's going on. So, this is what Paul put out.

[00:03:30]Uh, we noticed the tax starting at in UTC time at 2:46 p.m. UTC. A 2-year-old contract with 515 million night, 2% of the supply, had been withdrawn uh and moved over to the Kadano ecosystem.

[00:03:48]Other tokens within this contract, Minth XE or Zur and WMT were left untouched.

[00:03:56]And since then, the wallet one has sold over 288 million across various dexes, pushing the price down 50%. Uh, another wallet with 200 million is still active and barely has sold anything yet. These are the wallet addresses. I'll put the links down below for you guys, but you can watch the activity and what's happening on Fetch itself. You can see the price of Knight moving. It's uh yeah, you can see that massive drop there. And people are actually buying into the Knight tokens now, trying to buy that dip. But I do have to warn you guys, there is still more uh more of the potential of Knight being sold off. So, please be aware of that. Now, this here is an early analysis of what is actually happening at the moment. And I thought this was pretty good to look into here.

[00:04:43]This is from UTXO Maestro. and it pulls up put together this diagram here that shows where all the night tokens is moving at the moment which is interesting. So we got that 515 uh million from the one chain side of things moving over to an operational wallet within the Kadano ecosystem. So this is the ops wallet that moved into it and then split off to the secondary wallet here. So some of that 515 went to this wallet here which had 200 million night tokens. Wallet One continued to sell off as much of its uh Knight tokens as possible. We got 8 87 million uh of Knight that went to USDCX and they're trying to exit out of the ecosystem there. But from what I've heard and what I've read, it looked like the USDCX bridge had been closed down, too. So, that might be a good thing to stop that exit ramp. We also have the various dexes out there uh seeing the activity go up. We're seeing Knight being sold off for ADA at the moment and we're also seeing that being sent out to various uh centralized exchanges. So, we got 39 deposits to centralized exchange wallets. It looks like 500K went to Binance as well and they're trying to sell out at that point there. And uh we'll see what happens with that. But the interesting thing here is what is happening with Wallet 2. And this is why I said this is definitely someone within the Kadana ecosystem because they know what's going on here and how things work. So, wallet 2 was not just dumping.

[00:06:18]It put 68 million night tokens into liquid. Liquid finance is a borrowing lending protocol on Kadano. So they used that night tokens to borrow an extra 4.36 million ADA against it and then sent that 4.36 million ADE back off to wallet 1 where it continued to find ways to exit out the ecosystem. So that's that's crazy. That's insane. Nice to see that 68 million night tokens being locked into liquid finance, but that's not going to be repaid. That's going to be defaulted on. You can follow all the activity here. All the links to the uh Kadano scan address uh onchain address activity. I'm putting the links down below for you guys. Crazy stuff, guys.

[00:07:02]But like I said, uh we need to monitor and watch what's going on here. So, make sure you follow the Midnight Foundation for updates and accurate information. Uh various DEXes are encouraging that as well. And where it's good also good to see that dexes like min swap are pausing some of their features such as the zap in feature or the uh night ADA pools and the knight USDC pools that might make it a little bit harder for the attacker to exit out of these uh particular pools and liquidities um whatnot. But we're still seeing um you know DEX aggregators pass through and sell the assets. So, uh, we're going to see [clears throat] a lot more activity, guys. And we can see here, this is tracking one of the attackers wallets here, and they're constantly selling, um, a lot of the assets through here in 3 million batches. So, every 10 or so minutes, they'll sell 3 million night tokens for around 260,000 ADA. You can see some failed lots of failed transactions here. They didn't quite make it. Maybe slippage or whatever it is. But um if you are buying Knight tokens, be aware of what's actually happening here. There's still more activity going on. We haven't heard from the OneChain team yet. We haven't seen an official announcement that um there's been an exploit. Um all of this hasn't been confirmed yet. We don't know exactly what's going on. And we don't know if it is the one chain side of things or someone gained access to the wallet and is simply just exiting the ecosystem and you know selling all the assets. So we don't know exactly what's going on here but it doesn't look good overall.

[00:08:46]So that's all I know at the moment guys.

[00:08:48]It's still a developing story. Uh we will hear more. I'll keep you guys up to date with what's happening here but make sure you do follow the Midnight Foundation. It's good to know that it isn't specifically a Kadano vulnerability or a Midnight vulnerability. May entirely rest on the one chain side of things, which is really unfortunate because OneChain's been around for a very long time with a lot of good uptime uninterrupted for 8 years with no exploits supporting 48 chains. They've supported the Kadana ecosystem for a long time. And I really hope this isn't the case, but we'll find out more um as time progresses and various teams work out what's exactly is going on. Not good guys. On the on the upside though, um on Chang activity is up. Um Dexes are reaping rewards in regards to fees, but you know, it's definitely not the way you want to see things. Anyway, guys, [music] try and stay positive out there. I know the crypto space is kind of wild at the moment. Anyway guys, if you learned something from this video, make sure you hit that thumbs up, like, subscribe, notification bell. If you want to be kept up to date with everything, make sure you hit that subscribe [music] button. Oh god, I've got YouTube memberships down below. I got buy me a coffee links. Great way to support the channel. And like always guys, try and stay positive. I'll see you in the next video. [music]