Over the last few months, crypto hacking has turned rampant, especially in the decentralized finance (DeFi) market. This month itself, more than $750 million have been already lost in crypto hacks as per data from Chainalysis.
Crypto billionaire and FTX chief Sam Bankman-Fried have recently outlined a framework to deal with this problem of crypto hacks. Interestingly, the solution proposed by SBF involves rewarding the hackers.
In his latest blog post, the FTX chief proposed a “5-5 standard” wherein the hackers get to keep 5% of the total funds stolen or $5 million whichever is smaller. Other provisions include that the hacker acts in “good faith” and intends to cooperate on returning most of the crypto assets.
In crypto hacking, some of the hackers are also white-hat hackers who seek to expose the vulnerabilities in the protocol in return for a reward instead of making malicious gains. The SBF chief noted:
“Hacks are extremely destructive to the digital asset ecosystem. The 5-5 approach would have curbed the impact of hacks more than 98%”.
However, SBF is unsure of what would be the right standard for this process. The FTX chief also stated:
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.
As said, DeFi protocols have been the most vulnerable to hacks this year. So far in 2022, the DeFi protocols have lost a sum total of more than $4.4 billion.
FTX On Crypto Regulations
Sam Bankman-Fried also said that the U.S. arm of the crypto trading platform FTX will start conducting its own analysis on whether the crypto assets work as securities before listing them.
In the blog post, SBF said that FTX plans to use its internal framework for crypto securities until there’s more clarity from the SEC. However, this internal framework doesn’t guarantee that FTX will be free from scrutiny by the U.S. SEC.
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