DeFi Bulletin: Tornado Cash Developer Arrested and Compound Launches Third Version

The decentralised finance (DeFi) sector continues to attract heightened attention from cryptocurrency investors. ForkLog has compiled the most important events and news of the past weeks in a digest.

Key metrics of the DeFi segment

Total value locked (TVL) in DeFi protocols fell to $59.08 billion. MakerDAO led with $7.96 billion, while in second and third places are Lido ($6.9 billion) and AAVE ($6.2 billion) respectively.

TVL in Ethereum applications fell to $33.68 billion. Over the past 30 days the metric declined by 2% (on July 27 the value stood at $34.41 billion).

Trading volume on decentralized exchanges (DEX) over the last 30 days amounted to $54.3 billion.

Uniswap continues to dominate the non-custodial exchange market — it accounts for 69.3% of total turnover. The second DEX by trading volume is Curve (11.9%), the third is DODO (6.2%).

Tornado Cash mixer sanctioned by the US and its developer arrested

On August 8, OFAC added to the sanctions list the Tornado Cash site, as well as 39 Ethereum and 6 USDC addresses associated with it. According to the agency, since the service’s creation in 2019, criminals using it laundered more than $7 billion in cryptocurrency. Some of the funds are linked to the North Korean hacking group Lazarus Group.

Circle blacklisted USDC addresses of the mixer service.

Infrastructure platforms Infura and Alchemy blocked RPC calls to Tornado Cash. The non-custodial exchange Uniswap also shut off access to its platform for a number of relevant addresses. Similar measures were taken by dYdX.

On August 12, Dutch authorities arrested the Tornado Cash developer on suspicion of involvement in laundering funds and concealing criminal financial flows through the mixer. It later emerged that the person is a 29-year-old Pertsev.

The actions prompted a global crypto-community backlash, concerned about an attack on the open-source software space. In Amsterdam, a rally in support of Pertsev took place; in defense of the Tornado Cash developers, Cardano founder Charles Hoskinson and other notable industry figures spoke out.

On August 24, it emerged that the Dutch court kept Pertsev in custody and set a 90-day period for the first hearing of the case.

Later Fortune, citing a report by analytics firm Kharon reported, that Pertsev previously worked for a company connected to Russia’s FSB. The developer’s wife Kseniya Malik denied involvement with Russian security services.

Hacker failed to breach Rainbow Bridge cross-chain bridge, loses 5 ETH

Rainbow Bridge successfully repelled an attack by an unknown hacker that he launched on August 20.

The attacker sent a forged NEAR block, requiring a deposit of 5 ETH. According to Aurora Labs CEO Alex Shevchenko, the attacker expected that on Saturday morning developers would be slow to respond to the attack.

The system automatically rejected the forged block 31 seconds after the transaction was submitted. As a result, the hacker lost his deposit, and user funds remained safe.

Nomad offered hackers NFT for returning stolen funds

Hackers behind the Nomad cross-chain protocol breach of $190 million were offered NFTs as an incentive for returning more than 90% of the withdrawn funds.

Exclusive NFTs depicting a magician’s white hat are offered by the Metagame project. The token can be minted only by the recovering hacker, thus moving into the white-hat category — white hat.

Unknown breached the cross-chain protocol on August 2. The attackers exploited a vulnerability in the smart contract that allowed unauthorized withdrawals.

Compound launches third version of the DeFi protocol

On August 16, the lending project Compound announced readiness to launch the third version of the protocol called Comet.

According to the developers, the update marks the platform’s shift to a multi‑chain approach.

Senior software engineer Kevin Chen from Compound Labs noted that the first implementation of Comet will be a USDC-based market. Then support for five crypto assets available as collateral will be added: WBTC, WETH, UNI, LINK and COMP.

On August 24, the DAO behind the project announced the launch of the new version. On August 26, the developers announced the activation of Comet.

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