An arnaqué casino. The game of arbitrations between the price differences of an asset on different platforms is rather healthy in itself, since it allows to balance and smooth the price of this asset, avoiding too large price differences. But in some cases, arbitration can exploit clear abuse. That’s what a online casino suffered recently, with a clever little boy who took advantage of a deindexation stablecoin USDC against the US dollar.
Hacking the Multichain Protocol Exploited for Arbitration
A brilliant arbitration or a huge scam? Everyone will judge, but it is in any case a sacred story that tells us Arca, an investment company in the field of digital assets. In their latest newsletter That’s Our Two Satoshis “, the analysts of Arca thus note that a clever little one took advantage of the Multichain protocol hack July 6, 2023.
Twitter user BobSeinClar (@BobY_Ugo) was one of the first to report the maneuver. In the wake of the Multichain hack, the stablecoins on the blockchain network Phantom (FTM) have impaired. Thus, Circle’s stablecoin, theUSDClost its indexation on the dollar on the FTM network: it is down to 0.50 dollars instead of 1 dollar.
The address starting with 0xfad7(…) exploited this opportunity by using the online casino BC[.]Game. What’s next? Well ! we’ll detail it, but it’s as if this address was betting on red in roulette, and red came up all the time: the bank ended up blowing up!
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Those half-price USDCs paid him big
The address 0xfad7(…) took advantage of the BC casino[.]Game on the one hand, accept USDC coming in particular from the FTM network to carry out its arbitration maneuver, and on the other hand make USDC withdrawals to several other blockchains. All this considering that the value of USDC was forged in marble at 1 dollar regardless of the network and the trading conditions (big mistake!).
The only additional subtlety for our arbitrage exploiter was that it had to bet at least once his deposit on the casino, before being able to withdraw the sums obtained. So the process that allowed him to use USDC to 0,50 dollar (on FTM) to get USDC at 1 dollar (on other blockchains) was the following:
“Buy FTMs on a centralized exchange -> withdraw them on the Fantom network -> exchange them for USDC on Spookyswap -> send them to BC.Game -> make bets on low-risk games to reach the withdrawal threshold -> withdraw stablecoins on another network, with USDC again worth $1. »
Of course, the casino ended up realize the problem. Withdrawals were stopped, and the USDC wallets of the FTM network held by BC[.]Game were thus quickly sold and emptied. We knew that the haemorrhage caused by the Multichain protocol hack had been violent. But, in addition to this main hack, the strong instability that he trained seems to have made collateral victims which we would not necessarily have expected.
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