{"investigation":{"slug":"qubit","entity_name":"Qubit Finance","trust_score":10,"severity_base":null,"score_modifier":0,"confidence":1,"status":"published","content_type":"investigation","summary":"Qubit Finance was a Binance Smart Chain lending and cross-chain bridge protocol developed by South Korean firm Mound Inc., the same team behind PancakeBunny. On January 27, 2022, an attacker exploited a logic error in the QBridge Ethereum-BSC bridge to mint approximately 77,162 qXETH tokens without depositing any ETH, then drained roughly $80 million in protocol assets; no funds were ever recovered and the attacker was never identified.","sections":[{"content":"Qubit Finance (QBT) was a decentralized lending protocol operating on Binance Smart Chain (BSC), developed and operated by Mound Inc., a South Korean technology company. Mound Inc. also built PancakeBunny, a BSC yield-aggregator that suffered a separate $45 million flash loan exploit in May 2021. Following that incident, Qubit Finance was launched as part of Mound's recovery and expansion strategy. In April 2021, Mound Inc. received $1.6 million in seed funding from Binance Labs, with additional participation from IDEO CoLab, SparkLabs, and individual investors. The protocol offered lending, borrowing, and a cross-chain bridge (QBridge) enabling users to move ETH from Ethereum to BSC. The QBridge contract was first deployed on BSC on November 23, 2021, and on Ethereum on November 29, 2021. PeckShield had audited components of the Qubit lending protocol but explicitly stated it did not audit the QBridge codebase that was ultimately exploited.","heading":"Background","sources":[{"url":"https://pancakebunny.medium.com/introducing-qubit-qbt-innovating-lending-and-borrowing-on-the-bsc-9f3fe6438f44","name":"","type":"other","credibility":3},{"url":"https://pancakebunny.medium.com/pancake-bunny-x-binance-labs-introducing-your-team-mound-288c21209375","name":"","type":"other","credibility":3},{"url":"https://qbt.wiki/en/company/mound-inc/","name":"","type":"other","credibility":3},{"url":"https://chainbulletin.com/pancakebunny-suffers-from-flash-loan-attack","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"On January 27, 2022, beginning at approximately 9:18 PM UTC, an attacker funded their wallet with 0.8887725 ETH via Tornado Cash, obscuring their origin. Between 9:34 PM and 9:50 PM UTC, the attacker submitted 16 deposit transactions to the QBridge ETH contract on Ethereum. Each transaction called the deposit() function rather than the correct depositETH() function, and none included any actual ETH value. The root cause was a critical logic error: the QBridge contract used a custom safeTransferFrom() implementation that performed a low-level call() instead of relying on OpenZeppelin's SafeERC20 library. When the token address parameter was set to the zero address (0x0000000000000000000000000000000000000000), the low-level call returned success without reverting, because the zero address is an externally owned account (EOA) with no contract code that would revert the call. Three internal checks in the QBridgeHandler contract all passed: the zero address was whitelisted as a token, the deposit amount exceeded the minimum threshold, and safeTransferFrom did not revert. Additionally, both ETH deposits and ERC-20 token deposits emitted the same on-chain Deposit event, meaning the bridge relayer monitoring Ethereum could not distinguish between a real and a fake deposit. A Qubit relayer on BSC then processed 16 corresponding voteProposal transactions between 9:36 PM and 9:51 PM UTC, minting qXETH collateral for the attacker on BSC. The attacker accumulated approximately 77,162 qXETH (representing an alleged collateral value of $185 million at the time) and used it to borrow and extract approximately 15,688 WETH ($37.6 million), 767 BTC-B ($28.5 million), roughly $9.5 million in stablecoins, and approximately $5 million in CAKE, BUNNY, and MDX tokens. The assets were swapped into approximately 206,809 BNB, valued at around $80 million. The vulnerable deposit() function was a deprecated code path that remained active in the deployed contract after a newer depositETH() function had been introduced, indicating an inadequate code review and upgrade process. PeckShield confirmed post-exploit that it had audited the lending component but not QBridge.","heading":"The Logic Error Exploit","sources":[{"url":"https://medium.com/@QubitFin/protocol-exploit-report-305c34540fa3","name":"","type":"other","credibility":3},{"url":"https://certik.medium.com/qubit-bridge-collapse-exploited-to-the-tune-of-80-million-a7ab9068e1a0","name":"","type":"other","credibility":3},{"url":"https://slowmist.medium.com/our-analysis-of-the-80m-qubit-finance-exploit-b0f272cd8c25","name":"","type":"other","credibility":3},{"url":"https://www.halborn.com/blog/post/explained-the-qubit-hack-january-2022","name":"","type":"other","credibility":3},{"url":"https://rekt.news/qubit-rekt","name":"","type":"other","credibility":3},{"url":"https://medium.com/@QubitFin/protocol-exploit-report-2-30aade4d66de","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"The attacker's wallet address on both Ethereum and BSC was 0xd01ae1a708614948b2b5e0b7ab5be6afa01325c7. The wallet was funded from Tornado Cash prior to the exploit at 9:18 PM UTC on January 27, 2022. A representative exploit deposit transaction on Ethereum is recorded at 0x478d83f2ad909c64a9a3d807b3d8399bb67a997f9721fc5580ae2c51fab92acf, and a corresponding BSC voteProposal transaction is at 0x33628dcc2ca6cd89a96d241bdf17cdc8785cf4322dcaf2c79766c990579aea02. The attacker executed 16 such deposit cycles in a window of approximately 16 minutes. The QBT token is tracked on BscScan at contract address 0x17b7163cf1dbd286e262ddc68b553d899b93f526. The approximately 206,809 BNB drained from the protocol remained in the attacker's BSC address at the time of initial reporting. No on-chain movement attributable to a return of funds has been publicly documented.","heading":"On-Chain Evidence","sources":[{"url":"https://rekt.news/qubit-rekt","name":"","type":"other","credibility":3},{"url":"https://certik.medium.com/qubit-bridge-collapse-exploited-to-the-tune-of-80-million-a7ab9068e1a0","name":"","type":"other","credibility":3},{"url":"https://bscscan.com/address/0x17b7163cf1dbd286e262ddc68b553d899b93f526","name":"","type":"other","credibility":3},{"url":"https://blog.merklescience.com/hacktrack/analysis-of-qubit-finance-exploit","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"Immediately after detecting the exploit, the Qubit team disabled Supply, Redeem, Borrow, Repay, Bridge, and Bridge Redemption functions across the protocol. The team reached out directly to the attacker via on-chain message and public statement, appealing to them to return the funds. The initial offer was the protocol's maximum bug bounty of $250,000. The team subsequently increased the offer to $1 million, framing it as one of the largest bug bounties in history and appealing to the attacker's consideration of affected users and families. On February 8, 2022, the team published a compensation plan: Team Mound committed to surrendering all of its own protocol tokens to a community-controlled contract, with all resulting protocol fees and reserves to flow into a compensation pool. A targeted first tranche of at least $10 million was to be invested via an external asset management team, with further loan-funded tranches planned. A $500,000 bounty was also announced via the security platform Tox for information leading to identification of the attacker. Reports with international law enforcement were filed. Qubit Finance subsequently transferred governance authority to a community DAO. No funds were returned by the attacker. The compensation plan was never fully executed, and no evidence of meaningful user reimbursement has been publicly documented. The qbt.wiki community resource, maintained by alleged victims, states that $0 was returned to victims and that Mound Inc. provided no compensation.","heading":"Recovery Attempts","sources":[{"url":"https://medium.com/@QubitFin/our-compensation-plan-1-63e7c64738ed","name":"","type":"other","credibility":3},{"url":"https://www.bitdefender.com/en-us/blog/hotforsecurity/qubit-pleads-with-hacker-to-return-80-million-of-stolen-funds","name":"","type":"other","credibility":3},{"url":"https://finance.yahoo.com/news/losing-80-million-qubit-surrenders-110807610.html","name":"","type":"other","credibility":3},{"url":"https://www.infosecurity-magazine.com/news/crypto-finance-2m-bug-bounty/","name":"","type":"other","credibility":3},{"url":"https://qbt.wiki/en/","name":"","type":"other","credibility":3},{"url":"https://tokeninsight.com/en/news/qubit-finance-released-compensation-plan-team-mound-gives-up-all-of-its-tokens-to-compensate-the-community","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"Qubit Finance represents one of the largest DeFi bridge exploits on record, ranking among the top ten single-protocol losses at the time. Several compounding risk factors were present. First, the QBridge contract was deployed and operating without a complete security audit of its specific codebase; PeckShield audited the lending module but not the bridge. Second, a deprecated code path (the deposit() function) was left active in a deployed contract after the introduction of a newer depositETH() function, reflecting inadequate upgrade and code review practices. Third, the protocol used a non-standard implementation of safeTransferFrom() that diverged from the OpenZeppelin SafeERC20 library in a critical way: it did not verify that the target address contained contract code before treating a call as successful. Fourth, Mound Inc. is the same development team responsible for the PancakeBunny flash loan exploit of May 2021 ($45 million), indicating a pattern of inadequate security culture across two consecutive major protocols. Fifth, the attacker funded their wallet via Tornado Cash immediately before the attack, suggesting premeditation and awareness of blockchain transaction tracing. No funds have been returned, no individual has been charged, and the protocol is no longer operational. Users who held assets in the protocol at the time of the exploit have not received documented restitution. The trust score assigned to this entity is 10 out of 100, reflecting a catastrophic, unresolved exploit, the absence of recovery, and a pattern of security failures across the operating team's products.","heading":"Risk Assessment","sources":[{"url":"https://www.coindesk.com/markets/2022/01/28/defi-protocol-qubit-finance-exploited-for-80m","name":"","type":"other","credibility":3},{"url":"https://www.cpomagazine.com/cyber-security/hackers-exploited-a-logical-flaw-to-steal-80-million-from-defi-platform-qubit-finance/","name":"","type":"other","credibility":3},{"url":"https://www.bankinfosecurity.com/defi-platform-qubit-finance-hacked-for-80-million-a-18406","name":"","type":"other","credibility":3},{"url":"https://therecord.media/qubit-finance-platform-hacked-for-80-million-worth-of-cryptocurrency","name":"","type":"other","credibility":3},{"url":"https://www.theblock.co/post/132157/qubit-finance-bridge-ethereum-bsc-exploited-lost-80-million","name":"","type":"other","credibility":3}],"severity":"medium"}],"timeline":[{"date":"2021-04","event":"Mound Inc. receives $1.6 million seed funding from Binance Labs","source":"","date_original":"2021-04-01"},{"date":"2021-05-19","event":"PancakeBunny, Mound Inc.'s other protocol, suffers a $45 million flash loan exploit","source":""},{"date":"2021-11-23","event":"QBridge smart contract first deployed on Binance Smart Chain","source":""},{"date":"2021-11-29","event":"QBridge smart contract first deployed on Ethereum","source":""},{"date":"2022-01-27","event":"Attacker wallet (0xd01ae1a708614948b2b5e0b7ab5be6afa01325c7) funded via Tornado Cash at 9:18 PM UTC","source":""},{"date":"2022-01-27","event":"Attacker submits 16 fraudulent deposit() transactions to QBridge on Ethereum between 9:34 PM and 9:50 PM UTC with zero ETH attached","source":""},{"date":"2022-01-27","event":"BSC relayer processes 16 voteProposal transactions between 9:36 PM and 9:51 PM UTC, minting qXETH for attacker without any real deposit","source":""},{"date":"2022-01-27","event":"Attacker uses minted qXETH as collateral to borrow and extract approximately 206,809 BNB (~$80 million) from the protocol","source":""},{"date":"2022-01-28","event":"Qubit Finance disables all core protocol functions and publicly discloses the exploit","source":""},{"date":"2022-01-28","event":"Qubit team appeals to attacker to return funds, initially offering $250,000 bug bounty","source":""},{"date":"2022-01-29","event":"Qubit team increases bounty offer to $1 million; attacker does not respond publicly","source":""},{"date":"2022-01-31","event":"Bounty offer reported to have been raised to $2 million with no prosecution pledge","source":""},{"date":"2022-02-08","event":"Qubit Finance publishes compensation plan: Team Mound surrenders all tokens to community, commits to debt-funded $10M initial tranche","source":""},{"date":"2022-02","event":"Qubit Finance transfers governance authority to community DAO","source":"","date_original":"2022-02-01"},{"date":"2022-02-08","event":"Qubit team announces $500,000 bounty for information identifying the attacker, files reports with international law enforcement","source":""},{"date":"2022","event":"Protocol ceases operations; no funds recovered; attacker never identified or 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