Telecommunications giant Telefonica has joined forces with Chainlink Labs, marking a significant leap towards bolstering security within the blockchain space.
This partnership focuses on integrating Chainlink Functions with the Global System for Mobile Communications Association (GSMA) Open Gateway, connecting to Polygon’s Proof-of-Stake (PoS) blockchain network.
Oracles play a crucial role within the Web3 ecosystem by connecting blockchain-based smart contracts to real-world data, ensuring the reliability and accuracy needed for automated decision-making.
The GSMA Open Gateway offers standardised Telco APIs that bring innovative Telco capabilities to the Web3 ecosystem. This addresses challenges such as fraud prevention and secure account creation.
At the heart of this collaboration is the deployment of the SIM SWAP API, a tool designed to combat fraud by monitoring changes to SIM cards associated with mobile numbers.
This API, a product of the GSMA Open Gateway, offers a new layer of security for both individual and banking accounts.
By leveraging Chainlink Functions, developers will be able to fetch data from a wide array of real-world APIs, thereby, enabling smart contracts to operate with accurate and timely information. This would allow for the verification of information from multiple sources.
It would also ensure that a device’s SIM card has not undergone any unauthorised changes. Adding on, Telefonica said:
“Using the GSMA Open Gateway API via Chainlink also mitigates risk beyond transaction security, addressing two-factor authentication (2FA) and fraud detection in Web3 dApps and DeFi services.”
The rise of SIM swap hacks
Among the myriad of cyber threats, SIM swap hacks have emerged as a particularly insidious method increasingly being used by criminals to bypass security measures.
A SIM swap hack occurs when a fraudster manages to convince a mobile carrier to switch a victim’s phone number over to a SIM card in the criminal’s possession.
By doing so, the attacker gains control over the victim’s phone number, including incoming calls, messages, and, most critically, those 2FA codes sent via SMS.
This breach can lead to unauthorised access to bank accounts, social media profiles, and other sensitive online platforms.
Recently, three individuals were indicted for being involved in the $400 million hack that supposedly victimised cryptocurrency exchange FTX just hours after it declared bankruptcy.
The trio, namely Robert Powell, Carter Rohn, and Emily Hernandez, were embroiled in a yearslong conspiracy, executing SIM-swap attacks to hijack the identities of 50 individuals from March 2021 to April 2023.
They managed to do this by manipulating telecom providers into transferring the victims’ phone numbers to devices under their control.
Another notable victim was the United States Securities and Exchange Commission (SEC) X account, which suffered a breach in January this year. This then led to a false announcement regarding spot Bitcoin ETF approvals.
Taking the required steps
Telefonica’s partnership with Chainlink to utilise the SIM SWAP API is a prime example of the proactive steps being taken. It addresses critical issues such as 2FA and fraud detection in dApps and DeFi services.
The Chief Business Officer at Chainlink Labs, Johann Eid, expressed his enthusiasm for the partnership, saying:
“Our collaboration with Telefónica on the OpenGateway initiative extends the ways in which the industry-standard Chainlink platform underpins security across the blockchain ecosystem. Bringing Telefónica’s OpenGateway APIs on-chain with Chainlink Functions unlocks novel use cases and greater security for our industry that ultimately better protects users and their assets. We’re excited to bring Chainlink and major telecoms like Telefónica together to further the vision of a verifiable web where users remain in control”.
With a market capitalisation of $21.8 billion, Telefonica reigns in the field, owning telecommunications networks across Europe and Latin America. It is also preparing to showcase its advancements in Web3 and the Metaverse at the upcoming Mobile World Congress (MWC) in Barcelona from 26 to 29 February.
