SBF Proposes New Standard for Crypto Hacks, Claims Would Reduce Impact by 98%
FTX boss Sam Bankman-Fried recently proposed a framework for limiting the impact of exploits and scams that have been tormenting the crypto industry in recent years. Bankman-Fried suggested what he called a “5-5 standard,” which would allow perpetrators to keep 5% or $5 million of the stolen amount, whichever is smaller, as long as the hackers followed a few conditions.
FTX Founder Proposes “5-5 Standard” to Protect Crypto Community from Exploits
Sam Bankman-Fried, founder and CEO of crypto exchange FTX, published a blog post “Possible Digital Asset Industry Standards,” where he proposed a set of standards that would bring more clarity and provide better protection to crypto users. In the post, Bankman-Fried focused on ways to limit the impact of hacks and exploits that have been increasingly troubling crypto firms since 2021.
Bankman-Fried introduced what he referred to as a “5-5 standard” – which would let the hacker keep 5% of the stolen amount or $5 million, depending on which one is smaller. However, the crypto billionaire emphasized that in order for this to work, the hacker must be “working in good faith and fully intends to cooperate and return the bulk of the assets from the beginning.” Additionally, the customers should be made whole too.
On the other hand, if the perpetrator does not adhere to the 5-5 standard and keeps more than their “fair share,” they would then be “ treated as a ‘bad actor’ by the community.” Bankman-Fried said he is not absolutely sure that the 5-5 standard is right in terms of numbers, but he added that if it “had been followed, historically, it would have reduced the impact of hacks by more than 98%.”
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Hackers put DeFi in the Crosshairs
Bankman-Fried’s new proposal comes just a day after the decentralized finance (DeFi) lending protocol Moola Market has been exploited for $8.4 million. Early analysis showed that the hacker used CELO from Binance to borrow a substantial number of Moola tokens and pumped their value from $0.018 to nearly $5.6 in an hour.
Recent research by blockchain analysis firm Chainalysis showed that the majority of hacks and exploits in 2022 have been increasingly targeting DeFi protocols. This trend has been present last year as well when the number of attacks on DeFi soared by more than 1300%.
Due to the massive crypto sell-off in 2022 and the growing number of exploits, global governments have been working on tightening crypto regulations to protect consumers. Earlier this month, Treasury’s Financial Stability Oversight Council (FSOC) published a report that identifies three key weak points in the current state of crypto regulation.
Do you think SBF’s 5-5 standard could reduce the impact of crypto hacks on the industry? Let us know in the comments below.