A cyber attack on the Tapioca DAO protocol caused a dramatic drop in the value of its TAP token. The attacker stole 28 million TAP tokens and exchanged them for 1600 ETH.

Details of the Hack

On Friday, a breach occurred in one of the Tapioca DAO's smart contracts, where an attacker was able to drain 28 million TAP tokens. These tokens were then exchanged for 1600 ETH and converted into Tether's USDT stablecoin. According to Cyvers Alert, the sudden large-scale sale of tokens caused their price to plummet from $1.43 to $0.05, representing a 96% loss in value.

Where the Stolen Funds Went

The stolen TAP tokens were converted into ETH and transferred to the Binance Smart Chain via Stargate Finance. This move allowed the exploiter to quickly shift assets and possibly cover tracks. The hacker's wallet also contains approximately $4.7 million in stablecoins, including BSC-USD and USDC, indicating an experienced attacker who previously targeted DeFi protocols.

Response to the Hack and Actions Taken

The hacker used a phishing attack on Tapioca DAO co-founder, 0xRektora, to gain access to the funds. Co-founder Matt Marino stated that following the incident, law enforcement, lawyers, and the SEAL911 security team were notified. The protocol is also engaging Binance in efforts to trace and potentially recover the stolen funds. The TAP token was launched in June as part of a cross-chain lending and borrowing platform.

The Tapioca DAO breach and subsequent plummet in TAP token value highlight the risks in the cryptocurrency world, echoing recent attacks on other DeFi protocols.