Solana: What Is Behind The Loss Of Millions Of Users?

Only recently, Solana has made renewed, negative headlines. Attackers emptied the wallets of thousands of users, causing seven-digit damage. But what is behind the millions lost?

Slope: Bad software wallet makes users vulnerable

Anatoly Yakovenko, co-founder and leading developer of Solana, has long suspected a hack in the supply chain was behind the sudden attack. He believed in infecting essential databases used by countless developers.

Only iOS users were affected. It is now clear that this assumption is wrong. The cause of the problem is the wallet provider Slope. Slope is a software wallet available on various operating systems.

OtterSec security researchers discovered the underlying bug and shared related information on Twitter. Instead of being encrypted – as is the norm – Slope stored the user’s seed phrase in clear, unencrypted text.

Slope saved user phrases on a central server. The attacker accessed this, read the sensitive data, and stole the funds.

How should Solana users react now?

Slope users should create a new wallet and transfer all assets to it. This applies to all users who used Slope at any point in time.

According to Otter, the extent of lost assets is less than previously thought. Blockchain analysts estimate the damage caused by the stolen Solana and NFTs to be around five million US dollars. Otter suspects that the attacker was only able to steal the equivalent of four million US dollars.

Also interesting for some users: Investments lost by hackers can be legally declared tax losses in various states. This is pointed out by Shane Brunette, Managing Director of Crypto Tax Calculator.

The service is also available in Switzerland. Brunette reveals that such a tax loss is tax deductible in Canada, Great Britain, and Australia, among others.

Usually, however, the investor has to prove that he owns the stolen assets and that they are no longer under his control.