Attackers Drain Millions From Cover Protocol, Token Holders Attack Compensation Plan

Decentralized finance insurance project Cover protocol briefly suffered losses when an unknown attacker minted over 40 quintillion Cover tokens. However, after successfully cashing out tokens worth about $5 million, the attacker unexpectedly returned ether tokens valued at about $3.2 million before leaving a message for the Cover team.

Exploit No Longer Possible

Immediately after the attack, the value of the insurance protocol’s token plummeted by over 94% to $34 at the time of writing. After the incident, the Cover team immediately acknowledged the attack and went on to warn investors against buying the token while investigations were underway. The team also urged the attackers to return the rest of the stolen funds.

However, in their statement on December 28, the team tries to reassure investors that the vulnerabilities exploited by attackers had been fixed. The team says:

The exploit is no longer possible. Please do not buy Cover tokens, and remove your liquidity from the Cover/ETH pool on Sushiswap. Claim/No claim balancer pools are unaffected.

Compensation Controversy

Furthermore, the Cover team also announced a compensation plan based on the snapshot that “will be taken at block 11541218, one block before the first major exploited mint.” Nevertheless, the compensation plan appears to have sparked controversy for the project with some token holders now accusing the Cover team of being dishonest.

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For instance, in a response to Cover’s compensation plan, one Twitter user known as Phil argues:

You should make a snapshot from the moment you announced via Twitter that the contract got exploited Cover Protocol. Many people did not know what happened! They thought it’s just a big dip! Binance announced earlier what happened… Unbelievable!

Another user Kyouraku Shunsui asks “why the investors are blamed for being late for the team.” The user asks for a change to “the snapshot time.” However, despite the complaints, the Cover team appears to be proceeding as planned.

What are your thoughts on the attack on Cover? Tell us what you think in the comments section below.

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