FTX Founder Bankman-Fried Wants to Fix Crypto Hacking Problem

Sienna Bates
Source: CNBC

Bankman-Fried — co-founder of digital-assent exchange FTX — has developed a framework for curbing the devastation caused by hacks on cryptocurrency. Part of his plan includes capping the reward attackers receive at $5 million.

This year alone, over $3 billion has been looted from the crypto sector. If this rate continues, 2022 will surpass 2021 in terms of crypto hacks. Days ago, a hacker found vulnerabilities in Mango and walked away with $50 million of the $100 million taken from the decentralized finance application.

FTX Co-Founder Creates a Detailed Blog Post

In a blog post, Bankman-Fried explained what he calls the “5-5 standard.” In an attack, hackers can either keep $5 million or 5% of what they’ve taken, based on which is smaller. He believes this method would deter hackers by “more than 98%,” though he admitted he didn’t know the perfect solution.

Other important suggestions involved hackers acting in “good faith,” intending to return any funds stolen during an attack. These so-called “white-hat hackers” do not operate under devious pretenses and instead aim to expose a company’s vulnerabilities.

According to Chainalysis Inc., decentralized finance (DeFi) institutions are more likely to be attacked. DeFi protocols use software-based algorithms to allow people to trade, lend, and borrow without the need for a centralized intermediary.

Because Defi is considered essential for the wider adoption of digital tokens, it is important that these security issues be fixed. The heat is on crypto adopters to find solutions.