The hacker behind the $9.6 million exploit of the decentralized money-lending protocol zkLend in February claims they’ve just fallen victim to a phishing website impersonating Tornado Cash, resulting in the loss of a significant portion of the stolen funds.

In a message sent to zkLend through Etherscan on March 31, the hacker claimed to have lost 2,930 Ether (ETH) from the stolen funds to a phishing website posing as a front-end for Tornado Cash. 

In a series of March 31 transfers, the zkLend thief sent 100 Ether at a time to an address named Tornado.Cash: Router, finishing with three deposits of 10 Ether.

“Hello, I tried to move funds to a Tornado, but I used a phishing website, and all the funds have been lost. I am devastated. I am terribly sorry for all the havoc and losses caused,” the hacker said.

The hacker behind the zkLend exploit claims to have lost most of the funds to a phishing website posing as a front-end for Tornado Cash. Source: Etherscan

“All the 2,930 Eth have been taken by that site owners. I do not have coins. Please redirect your efforts towards those site owners to see if you can recover some of the money,” they added.

zkLend responded to the message by asking the hacker to “Return all the funds left in your wallets” to the zkLend wallet address. However, according to Etherscan, another 25 Ether was then sent to a wallet listed as Chainflip1. 

Earlier, another user warned the exploiter about the error, telling them, “don’t celebrate,” because all the funds were sent to the scam Tornado Cash URL.

“It is so devastating. Everything gone with one wrong website,” the hacker replied.

Another user warned the zkLend exploiter about the mistake, but it was too late. Source: Etherscan

How zkLend was exploited for $9.6 million

zkLend suffered an empty market exploit on Feb. 11 when an attacker used a small deposit and flash loans to inflate the lending accumulator, according to the protocol’s Feb. 14 post-mortem. 

The hacker then repeatedly deposited and withdrew funds, exploiting rounding errors that became significant due to the inflated accumulator. 

The attacker bridged the stolen funds to Ethereum and later failed to launder them through Railgun after protocol policies returned them to the original address. 

Following the exploit, zkLend proposed the hacker could keep 10% of the funds as a bounty and offered to release the culprit from legal liability and scrutiny from law enforcement if the remaining Ether was returned.

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The offer deadline of Feb. 14 passed with no public response from either party. In a Feb. 19 update to X, zkLend said it was now offering a $500,000 bounty for any verifiable information that could lead to the hacker being arrested and the funds recovered.

Losses to crypto scams, exploits and hacks totaled over $33 million, according to blockchain security firm CertiK, but dropped to $28 million after decentralized exchange aggregator 1inch successfully recovered its stolen funds. 

Losses to crypto scams, exploits and hacks totaled nearly $1.53 billion in February. The $1.4 billion Feb. 21 attack on Bybit by North Korea’s Lazarus Group made up the lion’s share and took the title for largest crypto hack ever, doubling the $650 million Ronin bridge hack in March 2022. 

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