Prisma Finance Demands Apology as Hacker Holds Funds Hostage: DeFi Firm in Standoff

Decentralized finance (DeFi) firm Prisma Finance is currently facing a challenging situation after a recent exploit that resulted in the loss of millions of dollars. The firm has stated that there are still funds from accounts that have not yet revoked the smart contract responsible for the exploit. In response, a self-proclaimed “white hat” hacker behind the exploit has demanded an apology and the revelation of the team’s identity before returning the funds.

The exploit, which occurred last week, was the result of two MigrateTroveZap contracts designed to migrate user positions from one trove manager to another. Prisma Finance has been working to recover the stolen funds and has urged users to ensure the safety of their wallets and positions before unpausing the protocol. Despite efforts to revoke the affected smart contract, there are still accounts at risk with open trove positions totaling over $1 million.

Prisma Finance’s core contributor, Frank, has outlined a “path forward” which includes conserving additional reserves while attempting to recover the stolen funds. A proposal was made to reduce liquidity and staked revenue, and the firm plans to restart the exploited contract once user funds are safe. However, the self-claimed white hat hacker has demanded a public apology and identification of the team members before returning the funds.

The hacker has accused Prisma Finance of failing to act in good faith and has insisted on a public apology and online conference where the team must show their faces and acknowledge their mistake. The hacker claims to have no responsibilities in the ordeal and is only trying to help Prisma rectify its mistake. Prisma, on the other hand, has pointed out that the hacker has yet to return any funds to show good faith.

Since the exploit, blockchain security firms have observed the hacker swapping the stolen funds to Ether and transferring them to a cryptocurrency mixer. Prisma Finance, which had about $10 million in total value locked on its protocol before the exploit, has seen a significant decrease in value locked. The situation raises questions about whether crypto projects should negotiate with hackers in such situations.

Overall, the ongoing dispute between Prisma Finance and the hacker highlights the challenges and risks associated with decentralized finance and the importance of security measures in the DeFi space. The outcome of this situation will likely have implications for how similar incidents are handled in the future.