Frax Finance X Account Hacked, CEO Suspects Insider at Musk’s Office

Frax Finance CEO Sam Kazemian holds firm that the account passwords were not tampered with and suggested that an insider at X might have been the cause of the breach.

Frax Finance's social media account was compromised even though the passwords were not tampered with at all. This led CEO Sam Kazemian to suspect that an insider at X might be responsible for the hack. Meanwhile, Twitter CEO Elon Musk and Meta’s Yann LeCun have reignited their long-standing feud, with LeCun criticizing Musk's scientific contributions and behavior. Frax Finance was not the only crypto crime victim as DMM Exchange lost more than $305 million worth of BTC to a recent hack. Velocore was also exploited for $6.8 million.

Frax Finance X Account Compromised

On Jun. 1, Frax Finance’s social media account on X was compromised by a hacker. Interestingly, the breach happened without tampering with the account’s existing passwords. In an attempt to regain control of the account, Frax Finance CEO Sam Kazemian took to X to look for some assistance from his followers in contacting X customer service.

The typical response time from X for handling complaints like these are around 72 hours, and it involves a support request linked to an email address and a back-and-forth process for more information.

Despite the standard recommendation from X to change passwords during account compromises, Kazemian held firm that the passwords were not tampered with at all and suggested that an insider within X might have been the cause of the breach. He also made a point of mentioning that no issues within Frax Finance contributed to the incident.

More than 48 hours after the hack, no updates were provided by Frax Finance, Kazemian, or X representatives with regards to the recovery of the account. In the meantime, Kazemian advised people to avoid all website links shared from the compromised accounts.

AI Titans Clash

Twitter CEO Elon Musk is not just facing pressure from Frax Finance. Meta’s vice president and chief AI scientist, Yann LeCun, and Musk have started a heated debate on social media. The still ongoing conflict started on X back when it was called Twitter, and recently escalated dramatically. The latest clash began when LeCun hijacked a post from Musk advertising positions at xAI, Musk’s artificial intelligence company.

In the days after this, tensions rose to a fever point on Sunday, Jun. 2, when LeCun posted a 379-word tirade attacking Musk’s treatment of scientists and even accusing him of being a danger to society.

The dispute between these two has deep roots. Musk's public beef with Meta dates back to 2020 when he famously tweeted “Facebook sucks” in response to criticism from a Facebook AI scientist.

The most recent altercation started during the week of May 27, 2024, when LeCun responded to a recruitment post for Musk’s xAI. Musk questioned LeCun’s scientific contributions over the past five years and also insinuated that LeCun lacked the capability to run a company.

LeCun was not very happy about this and responded forcefully by criticizing Musk’s treatment of scientists and his hype around achieving AGI by 2025.

Additionally, LeCun accused Musk of undermining democracy by attacking traditional media and promoting misinformation. He described Musk as a conspiracy theorist, and also appointed out some examples like “PizzaGate” and claims about illegal immigrants corrupting elections. LeCun argued that a technological visionary should be a rationalist, but rationalism requires truth, which he implied Musk disregards.

ARK Invest Buys Into xAI

Despite the rising tensions on X, ARK Invest led by Cathie Wood announced the acquisition of a stake in Elon Musk’s AI startup, xAI, on May 28. The investment was revealed in an email to clients. ARK Chief Futurist Brett Winton said it represents around 2% of the fund’s holdings.

This move comes as ARK Invest is increasingly shifting its focus to AI. In fact, 4% of its holdings are in OpenAI and 5% in Anthropic. Winton projects that AI foundation models will be worth trillions by the decade's end. Cathie Wood also previously attracted some attention for her investments in Tesla during the COVID-19 pandemic.

xAI was launched by Musk in March of 2023, and plans to compete with AI giants like OpenAI, Google, and Microsoft. On May 26, xAI raised $6 billion in a Series B funding round, boosting its valuation to approximately $24 billion. Some of the more well known investors include Andreessen Horowitz, Sequoia Capital, Fidelity, and Prince Alwaleed bin Talal.

Musk plans to launch a new data center by fall 2025, dubbed the “Gigafactory of Compute,” to train and develop xAI’s Grok AI system. However, during a speech at the VivaTech Paris 2024 conference, Musk shared some of his concerns about current AI models, and sees them as not being “maximally truth-seeking” . He also predicted that AI will soon surpass human capabilities, potentially rendering employment obsolete.

DMM Exchange Hacked

Frax Finance was not the only victim of crypto crime over the past few days. Centralized cryptocurrency exchange DMM lost more than $305 million worth of Bitcoin (4,502 BTC) due to a server hack on May 30.

The exchange confirmed the breach on its website and assured users that all deposits would be fully guaranteed. In response to the hack, DMM also temporarily halted withdrawals, new account openings, new spot buy orders, and all new leveraged orders, though existing limit orders were unaffected.

The incident first came to light at 10:14 pm UTC on May 30, when Whale Alert reported a large transfer of BTC, linking to blockchain data showing the outflow from a single wallet. DMM later confirmed the loss on its website, linking it to the transaction identified by Whale Alert.

DMM stated that it is taking measures to prevent further unauthorized access and will procure an equivalent amount of BTC to compensate users, with support from its group companies. The exchange advised users to be on the lookout for any notices that services will be resuming.

DMM was launched in January of 2018, and is owned by the e-commerce conglomerate DMM Group, which also owns a crypto mining firm.

Velocore Exploited for $6.8M

Decentralized exchange Velocore, which operates on the Telos, zkSync Era, and Linea blockchains, was also recently exploited for approximately $6.8 million in tokens due to a vulnerability in its smart contract liquidity pools.

The hacker exploited an overflow logic flaw, using a flash loan to turn a small withdrawal into a large deposit, thereby draining Velocore's volatile pools on zkSync Era and Linea. Luckily, assets on Telos and stable pools were not affected.

The exploit took place despite the company committing to multiple audits and security measures, and Velocore shared its deep regret for the incident. Velocore has also disabled the logic flaw used in the exploit, eliminating the chance of a copycat attack.

In response to the breach, the ConsenSys-built Linea Ethereum Layer 2 network temporarily paused block production in an attempt to mitigate losses, halting the sequencer to prevent additional funds from bridging out.

Velocore has offered the hacker a 10% white hat bounty if they return the remaining funds by Jun. 3, 8:00 UTC. However, the hacker has not responded at all so far and has since deposited approximately 1,700 ETH, worth about $7 million, into crypto mixer Tornado Cash.

Velocore promised to compensate users that were affected by the exploit, and took a snapshot of the blockchain state before the incident. Velocore also plans to release an appropriate compensation plan once operations resume again.