Coinbase Retains $1 Million Windfall From Curve Finance Hack, Faces Backlash For Not Returning Funds

Following the July cyber onslaught on Curve Finance, a dominant player in the decentralized finance (DeFi) sector, Coinbase COIN, has found itself in an ethical dilemma.

What Happened: The attack, which saw the theft of a massive sum from Curve, has left Coinbase holding an unexpected profit of around $1 million. The windfall for Coinbase emerged from the turmoil that engulfed the DeFi market following the security breach at Curve.

The heist disrupted Curve's asset valuation system momentarily, paving the way for a golden opportunity that a trading bot didn't hesitate to exploit, according to CoinDesk.

To ensure swift processing of its trade by an Ethereum ETH/USD blockchain validator, the bot shelled out 570 ETH, translating to about $1.06 million at that juncture.

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The transaction, facilitated by Coinbase, reportedly stands as one of the highest in the history of transactions associated with Maximal Extractable Value (MEV).

While a significant portion of the assets pilfered during the attack has reportedly been retrieved, Alchemix, a protocol that endured a loss of $22 million in Curve-based tokens, claims that Coinbase has resisted pleas to relinquish the funds it inadvertently garnered from the event.

“Coinbase has shown no willingness to return the funds, despite knowingly benefitting directly from the exploit,” Alchemix told the outlet.

The crypto industry, which has witnessed thefts amounting to $735 million this year as per DefiLlama, has grappled with the persistent issue of fund recovery, a concern that could deter potential users.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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