Crypto hackers drain nearly $200 million in Nomad theft

Yahoo Finance’s David Hollerith joins the Live show to discuss the crypto heist that hit crypto firm Nomad.

Video transcript

BRAD SMITH: Crypto bridge project Nomad, the latest to suffer a crypto exploitation with hackers and attackers draining nearly $200 million. For more on this and the crimes in the crypto space, we've got Yahoo Finance's David Hollerith. David, what do we know about this so far?

DAVID HOLLERITH: Yeah, Brad, so last night, as you pointed out, nearly $200 million was drained from this crypto bridge project. Now, the chaotic event appears to have been the result of a recent upgrade the protocol made which sort of led a flaw in the software that was easier to exploit, that's based on a security researcher. Now, a spokesperson from Nomad says that they have notified law enforcement, and retained help from blockchain analytics firms that might help them retrace the funds and hopefully recover them.

Just background on the crypto-- on crypto bridge projects in general, they're used to allowing users to move crypto assets from one blockchain to another. This is incredibly pivotal if the crypto ecosystem is to sort of the inner chain, inner blockchain operable.

Now, this latest exploit sets the amount of money stolen from crypto bridges, so far this year, above $1 billion. And the total funds in crypto-related exploits to somewhere between $1.9 to over $2 billion, depending on how you count crypto hacks.

Now, notably, the two largest crypto bridge hacks that happened this year, they're-- one of the-- or two of the largest crypto hacks, in general in its short history, were the Ronin network and then also the Wormhole. And between those two situations, we saw almost a billion dollars of funds stolen. But notably, both projects-- backers of both projects, I should say, have come out after the investigation or further along in a post-mortem and said they will reimburse customers or any investors who've lost funds.

We don't know whether or not Nomad will be able to do that. But that's sort of the next thing to look is whether or not customers, investors, users, in general, will be made whole.

BRIAN SOZZI: And David, you're tracking another crypto crime.

DAVID HOLLERITH: I am. I am, yeah.

BRIAN SOZZI: And the SEC--

DAVID HOLLERITH: Oh, the--

BRIAN SOZZI: The SEC is looking into something, right?

DAVID HOLLERITH: Right, yeah. The-- yeah. So yesterday, the SEC has put in charges against 11 individuals who have been a part of a fraud. So obviously, that's different from hacks in that it's very clear what's happened and they have been charged.

Now, what's interesting to point out about this is Vitalik Buterin, the creator of the Ethereum network, actually came out yesterday as pointing out that he had sort of been aware of this. And they had reached out to him for support. And it kind of brings in some interesting details about the nature of fraud in the crypto sector right now.

Now, the problem, I think, in deciphering for investors whether or not fraud is something that's easy to spot becomes more difficult in the crypto sector because a lot of these projects-- almost all of them-- are new. And so the returns that can be made, the actual innovation at work is still being tested. So Buterin came out sort of as saying-- as just underlying, that leaders in the sector-- CEOs, business owners-- need to be more active in communicating when they spot fraud.

BRAD SMITH: OK. Well, there is a ton to continue to keep an eye on, especially with regard to some of the sums and totals that we're seeing within the crypto fraud and the hacking, kind of sums that have come forward at this point in time. David Hollerith is helping us break this down this morning. David, appreciate the time.