Posted on December 6, 2021 at 7:15 PM
A recent report reveals that crypto exchange BitMart suffered a hacking incident, losing $196 million in the process. The threat actor compromised Binance and Ethereum wallets with a series of transfers that started around 2:30 PM ET on December 4. Shortly after the breach, there was a massive outflow of tokens, including USDC and Shiba.
Although an investigation into the matter is ongoing, it’s not clear who is responsible for the breach. the investigation reveals that the stolen digital assets have been transferred to an Ethereum mixing service, which will make it more difficult for the funds to be retrieved. It shows that the perpetrators are highly skilled and know how to conceal their loot without any trace.
Bitmart Says The Incident Is A “Large-Scale” Breach
BitMart confirmed the hacking incident in an official statement, calling it a “large-scale breach” and stating that the threat actors stole $150 million in assets. But data analysis and blockchain security company Peckshield noted that the actual amount of crypto assets stolen could be closer to $200 million.
But according to BitMart’s founder, Sheldon Xia, only a “small percentage” of crypto assets were affected. He added that all withdrawals have been frozen in the meantime to prevent any further activity, as the security system is under review.
Peckshield first noticed the security breach after discovering that a Bitmart’s address showed an unusual outflow of tens of millions of dollars to an address.
According to Peckshield, the hackers stole about $196 million worth of different cryptocurrencies on the Binance smart chain and $100 million worth of coins on the Ethereum blockchain.
The security firm noted that the threat actors stole a mix of more than 20 tokens, including Binance coin, Shiba Inu, and safemoon. It’s not clear whether customers’ funds were specifically targeted and whether the affected users will be reimbursed if the stolen funds cannot be retrieved.
Bitmart offers a mix of leveraged futures trading and spot transactions, as well as staking and lending services. According to CoinGecko data, the company is one of the largest centralized crypto exchanges by trading volume.
Bitmart stated that it’s not clear which hacking strategy the threat actor used, but everything that occurred after the attack was straightforward. It was a classic case of “transfer-out, swap, and wash,” according to Peckshield.
Hackers Sent The Stolen Funds To A Privacy Mixer
After the hackers have successfully transferred the funds out of the exchange, they exchanged the stolen tokens for ETH using the decentralized exchange aggregator called “finch.”Afterward, a privacy mixer known as Tornado Cash was used to store the coins.
Threat actors generally use a tumbling or mixing device to prevent stolen tokens from being traced. The chief information security officer at Digital Shadows, Risk Holland, stated that such a service enables users to mix clean cryptocurrencies with stolen funds to make a new type of crypto. This makes them currency swaps and very difficult to trace
So, while the blockchain is public, the mixing service will make it more difficult for investigators to trace transactions to their final destination.
Increasing Level Of Attacks In The Crypto And Blockchain Sector
The latest attack is coming at a time blockchain and crypto-based firms are facing a series of attacks. In August this year, cryptocurrency platform Poly Network was the victim of a cyberattack that cost the platform over $500 million worth of tokens. However, the threat actor subsequently returned nearly all the stolen funds to the platform.
And just last week, crypto lender Celsius Network announced that it lost funds due to a $120 million hack of BadgerDAO, a decentralized platform.
The Poly Network attackers claimed that the hacking was carried out to help the platform fortify its security. However, such a claim may be an attempt to avoid prosecution after security researchers obtained data that may have identified the threat actors.
Although the funds involved in the Poly Network hack were higher than the amount stolen in Bitmart’s heist, the latter is still considered one of the biggest centralized exchange hacks in history. It also shows the increasing menace of threat actors who are stopping at nothing to steal from crypto platforms. The decentralized technology makes it an attractive place for criminals who can steal a large amount of money and get away without ever being caught.
The ease of theft in the sector makes it very challenging for regulators who are looking for better ways of making the crypto sector safe.