The price of cryptocurrency Solana (CCC:SOL-USD) was down as much 14% today following a high-profile cyberattack.
So what do you need to know? Wormhole reported that more than $320 million of Ethereum (CCC:ETH-USD) was stolen from its platform in a coordinated hack.
Essentially, Wormhole is a bridge that connects the Ethereum blockchain to the Solana blockchain. The attacker was able to exploit this connection, draining Ethereum and Solana coins from the protocol.
What Happened With the SOL Crypto?
According to reports, the Wormhole attacker stole more than $320 million of wETH, or wrapped Ethereum. Wormhole confirmed the attack on Twitter. It took functionality for its bridges offline until it confirmed that it had patched the vulnerability that led to the attack. Later this morning, Wormhole reported that all stolen funds had been restored.
The team is working on a detailed incident report and will share it asap
18:26 UTC – contract was exploited for 120k ETH
00:33 UTC – vulnerability was patched
13:08 UTC – ETH contract has been filled and all wETH are backed 1:1
13:29 UTC – the Portal (token bridge) is back up
— Wormhole🌪 (@wormholecrypto) February 3, 2022
Last week, investors saw a similar attack when a hacker stole $80 million from Qubit Finance. Blockchain analytics firm Chainalysis recently reported that crypto scams saw a cumulative $7.7 billion stolen in 2021.
Why It Matters
The Wormhole hack has sent SOL’s price down to $98.37 and brought its year-to-date decline to 45%. The growing number of cyberattacks comes as cryptocurrency prices have declined across the board since last November.
The declines come as investors seek less-speculative securities at a time of high inflation. Also hurting matters are estimates the Federal Reserve will hike rates five times in 2022.
More broadly, the ongoing scams and cyberattacks are shaking confidence in the security and reliability of digital coins and tokens. The repeated hacks also provide ammunition to lawmakers and regulators who say that cryptocurrencies are used to fund criminal activities. The threat of enhanced regulation for the entire cryptocurrency sector is growing in the U.S. and other countries such as India and China.
What’s Next for Solana
The SOL crypto is taking its lumps today following news of the Wormhole hack. Unfortunately, today’s decline only adds to the weakness in the SOL price this year. In time, the cryptocurrency might be able to recover. However, the larger issue of repeated cyberattacks and lax security when it comes to digital coins and tokens does not appear likely to end anytime soon.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
