Crypto hacking has become rampant in recent months, particularly in the decentralized finance (DeFi) market. According to Chainalysis, more than $750 million has already been lost in crypto hacks this month.
Crypto billionaire and FTX CEO Sam Bankman-Fried recently outlined a framework to address the issue of cryptocurrency hacks. Surprisingly, the SBF solution involves rewarding the hackers.
In his most recent blog post, the FTX CEO proposed a “5-5 standard,” in which the hackers keep 5% of the total funds stolen, or $5 million, whichever is less. Other provisions state that the hacker is acting in “good faith” and intends to cooperate in the return of the majority of the crypto assets.
Some hackers who engage in crypto hacking are also so-called “white-hat” hackers, who work to reveal protocol flaws in exchange for rewards rather than for personal gain. The SBF leader observed:
Hacks are extremely destructive to the digital asset ecosystem. The 5-5 approach would have curbed the impact of hacks more than 98%
Keeping DeFi and peer to peer transfers free is crucial.
There are policies I honestly think are key to achieving that. I could be wrong about those policies–I probably am wrong about some! But in the end the most important thing is to keep commerce and expression free.
— SBF (@SBF_FTX) October 20, 2022
DeFi protocols have, as stated, been the most susceptible to attacks this year. The DeFi protocols have lost a total of more than $4.4 billion so far in 2022.
Aside Hacking, FTX On Regulations For Crypto
Sam Bankman-Fried added that before listing any crypto assets, the American division of the cryptocurrency trading platform FTX will start conducting its own research into whether they qualify as securities.
According to SBF’s blog post, FTX intends to use its own internal framework for cryptocurrency securities until the SEC provides more clarification. This internal structure does not, however, ensure that FTX will not be subject to SEC investigation.
