KyberSwap attacker used ‘infinite money glitch,’ Australia’s tax agency won’t clarify DeFi rules: Finance Redefined
Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.
The attacker who stole $46 million from the KyberSwap protocol has used a complex strategy described by a DeFi expert as an “infinite money glitch.” With the exploit, the attackers tricked the platform’s smart contract into believing it had more liquidity available than it did.
Australia’s tax regulator has failed to clarify its rules on DeFi despite Cointelegraph reaching out for answers. The regulator could not answer whether capital gains taxes apply to liquid staking and transferring assets to layer-2 bridges.
The DeFi ecosystem flourished in the past week thanks to ongoing bullish market momentum, with most of the tokens trading in green on the weekly charts.
DeFi expert Doug Colkitt laid out a thread on X (formerly Twitter), describing the smart contract exploit engineered by the KyberSwap attacker who drained $46 million from the protocol.
Colkitt described the exploit as an “infinite money glitch,” where the hackers tricked the smart contract into believing that KyberSwap had more liquidity than it really had. Colkitt also highlighted that it’s the “most complex” smart contract he’s ever seen.
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On Nov. 9, the Australian Taxation Office (ATO) released new guidance on DeFi. However, the regulator failed to clarify whether capital gains taxes apply to various DeFi features, such as liquid staking and sending funds to layer-2 bridges.
Cointelegraph reached out to the ATO to clarify the new rules. However, a spokesperson from ATO said that the tax consequences of a transaction “will depend on the steps taken on the
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