Polycule Major Theft Incident Revealed: Why Telegram Trading Bots Have Become Hacker Hunting Grounds

Prediction markets are experiencing a wave of Telegram trading bot explosions, but behind this trend lies a new hunting ground that hackers are eyeing closely.

Sudden $230,000 Theft Incident

On January 13, the well-known prediction market interaction tool Polycule announced a major security breach: its Telegram trading bot was hacked, and approximately $230,000 of user funds were stolen in an instant. The team responded urgently, taking the bot offline, and on-chain promised compensation for affected users on the Polygon network. This incident once again rings alarm bells—how fragile are security defenses when trading experiences are condensed into a single Telegram message?

How Polycule Works: The Cost Behind Convenience

The core appeal of Polycule is simple: users can browse markets, manage positions, and allocate funds on Polymarket without leaving Telegram. This seemingly seamless experience is actually built on a complex backend system.

When users input /start, the backend automatically generates a Polygon wallet and safeguards its private key—this design choice is crucial. Subsequently, users can complete transactions via various commands: /trending to view hot markets, /search to find specific predictions, directly paste Polymarket links for quotes, or even place orders with /buy and /sell.

Highlights of Polycule include:

• Wallet Management: The /wallet menu supports viewing assets, withdrawing funds, POL/USDC swaps, and even exporting private keys.
• Cross-Chain Bridging: Deep integration with deBridge protocol allows users to bridge assets from Solana, with the system automatically deducting 2% SOL and converting it into POL for gas payments.
• Copy Trading: The most advanced feature—users can follow other wallets’ operations by percentage, fixed amount, or custom rules, even supporting reverse copying and strategy sharing.

All of this is managed by Polycule’s central server, which signs transactions on behalf of users, listens to on-chain events, and manages keys continuously. While convenient, this centralization introduces risks.

Systemic Vulnerabilities in Chatbot Mode

Telegram trading bots are prone to attacks primarily because this mode inherently has three difficult-to-avoid structural issues:

First Line of Defense Fails: Centralized Private Key Storage

Almost all Telegram trading bots store user private keys on their servers, signing each transaction on behalf of the user. While this design improves user experience (no manual authorization needed), it also means that if the server is compromised, the database is leaked, or operational personnel inadvertently disclose configurations, attackers can export all user private keys in bulk, enabling them to transfer millions of dollars instantly.

Second Line of Defense Flaws: Single-factor Authentication

Authentication relies solely on the Telegram account itself. If a user experiences SIM hijacking, loses their phone, or their account is stolen, an attacker can take over the bot wallet without knowing any mnemonic or password, just by controlling the Telegram account.

Third Line of Defense Lacking: Absence of User Confirmation Mechanisms

Traditional wallets require users to confirm each transaction via a local popup—this is the last manual safeguard. In bot mode, the conversation between user and bot is asynchronous and textual, with no explicit “confirmation” step. If backend logic has vulnerabilities or is tampered with, the system might automatically transfer funds without the user’s awareness.

Specific Attack Surfaces Exposed by the Polycule Incident

Considering Polycule’s functional design, the theft and potential risks may focus on the following areas:

Private Key Export Permissions Vulnerability

The /wallet menu allows users to export private keys at any time, indicating that the backend stores reversible key data (not one-way hashes). If there are SQL injections, unauthorized API endpoints, or log leaks, attackers could invoke the export function to extract private keys in bulk—highly consistent with the large-scale theft scenario.

URL Parsing Potentially Triggering SSRF Attacks

Polycule encourages users to submit Polymarket links to quickly retrieve market details. If URL validation is lax, attackers could forge links pointing to internal network or cloud service metadata. When the bot backend parses such links, it might “trap” itself, exposing internal IPs, database credentials, AWS keys, and other sensitive information.

Copy Trading Event Listening Risks

Copy trading requires the bot to listen in real-time to the target wallet’s on-chain activities. If these listening events can be forged or lack proper security filtering, followers could be tricked into interacting with malicious contracts, leading to funds being locked or directly drained.

Cross-Chain and Auto-Exchange Risks

Automatically converting 2% SOL into POL involves exchange rate queries, slippage control, oracle calls, and permissioned execution. If these parameters are not strictly validated, hackers could amplify exchange losses during bridging, transfer gas budgets, or forge deBridge receipts to create fake deposits or duplicate entries.

How Projects and Users Should Respond

Recommendations for Project Teams

• Publish a comprehensive technical review before restoring services, clearly explaining the attack vectors.
• Conduct third-party security audits focusing on key storage, permission isolation, and input validation.
• Reassess server access controls, code deployment processes, and operational standards.
• Introduce secondary confirmation or limits for critical operations (like private key export and large transfers) to reduce single points of failure.
• Establish transparent security monitoring and incident response mechanisms, regularly disclosing to users.

Advice for End Users

• Avoid storing large amounts of funds in bot wallets; set reasonable position limits.
• Promptly withdraw trading profits; do not let gains compound within the bot.
• Enable Telegram’s Two-Step Verification and advanced security options immediately.
• Manage different Telegram accounts on separate devices to prevent single points of failure.
• Wait and observe until the project provides clear security commitments and a full incident review—avoid rushing to add more funds.

The Future of Prediction Markets and Telegram Bots

Telegram trading bots will remain a popular gateway for prediction markets and meme coins in the short term, given their convenience. However, this sector will also continue to be a hunting ground for attackers—risk persists as long as user private keys are centrally managed.

The key lies in the project’s attitude. Security should not be an afterthought but integrated from day one of product design. Directions such as introducing local signatures, implementing MPC wallets, or hardware wallet integrations are all feasible. Transparency about security progress and building trust will also become crucial competitive factors.

The Polycule incident essentially sends a message to the entire industry: while enjoying the convenience of chat shortcuts, we must also pay the price for centralized risks.