Frankencoin - Lalanda's results

Lines of code

https://github.com/code-423n4/2023-04-frankencoin/blob/main/contracts/Equity.sol#L313

Vulnerability details

Impact

In the case of a devastating loss in equity, qualified FPS holders are able to restructure and restart the system. The function restructureCapTable is used in that case, to wipe all FPS shares of all addresses provided in the addressesToWipe array. The function however will only wipe the FPS shares of the first position of the array. The function will not fail, and the caller could believe all addresses provided were wiped, process with the donation of ZCHF shares to the detriment of himself and benefit of the accounts not wiped on the restructureCapTable function.

function restructureCapTable(address[] calldata helpers, address[] calldata addressesToWipe) public {
    require(zchf.equity() < MINIMUM_EQUITY);
    checkQualified(msg.sender, helpers);
    for (uint256 i = 0; i<addressesToWipe.length; i++){
        address current = addressesToWipe[0]; // @audit-issue only the balance of the first address is burned
        _burn(current, balanceOf(current)); 
    }
}

Proof of Concept

After a loss in equity most have lost hope in the Frankencoin system except for Alice still believes in it and is willing to provide ZCHF to save it. Alice is donating ZCHF to the minter reserve but does not want to share it with the other FPS holders. Alice calls the restructureCapTable function to burn the shares of all other FPS holders for the possibility to bootstrap the system again owning 100% of all FPS shares.

1. Alice calls the restructureCapTable function with the parameter array addressesToWipe containing all other FPS holders addresses with FPS shares to burn.
2. Alice can now donate ZCHF for the possibility to bootstrap the system again owning 100% of all FPS shares.
3. restructureCapTable only deleted the first address on the array, so Alice will lose the ZCHF donated in step 2 with the other FPS holders.

Recommended Mitigation Steps

Change the following line:

@@ -310,7 +310,7 @@ contract Equity is ERC20PermitLight, MathUtil, IReserve {
        require(zchf.equity() < MINIMUM_EQUITY);
        checkQualified(msg.sender, helpers);
        for (uint256 i = 0; i<addressesToWipe.length; i++){
-            address current = addressesToWipe[0];
+            address current = addressesToWipe[i];
            _burn(current, balanceOf(current));
        }
    }