Posted on August 19, 2021 at 5:40 PM
Hacks related to the crypto sector have been rampant in recent weeks. Shortly after the $600 million hack on Poly Network, Liquid Exchange is now the latest victim, with the intrusion costing the firm around $94 Million.
Liquid is a regulated cryptocurrency exchange platform in Japan. The exchange has now suspended asset deposits and withdrawals after an attack on the platform’s hot wallets.
In a tweet, the exchange that the attack on the hot wallets had prompted swift action whereby the firm transferred its assets into cold storage. “We are currently investigating and will provide regular updates. In the meantime, deposits and withdrawals will be suspended.”
Stolen Amount Still Unclear
Another tweet by Liquid exchange stated that the hacker was linked to four blockchain addresses. These addresses were linked to Bitcoin, Ethereum, Tron and XRP. However, the firm did not state the exact amount of stolen assets, but it assured users that it will provide regular updates.
However, various sources have estimated that the hack had led to losses of around $94 million, which included $45 million linked to the Ethereum blockchain. The Bitcoin address received around 106 BTC with an estimated value of $4.7 million, which was sent through multiple transactions. Tron and XRP addresses received more than $10 million.
The hacker responsible for the attack was converting the stolen tokens to ether using peer-to-peer exchanges. Hence, various exchanges have liaised with Liquid to track the stolen funds and freeze the hacker addresses. The CEO of KuCoin cryptocurrency exchange tweeted that he was aware of the incident and that the hacker wallet addresses had been blacklisted.
The hack on Liquid had a major impact on BTC’s prices, given that shortly after Liquid announced that its wallets were compromised, Bitcoin dropped to below $45,000 and is currently trading at the $44K levels.
Crypto-Related Hacks on the Rise
The recent hack on Liquid is one of many in the crypto sector. Data metrics on this sector from CipherTrace show that the value of cryptocurrencies stolen in thefts, frauds, and hacks were over $600 million between January and mid-July. This figure has doubled since the beginning of August.
Last week, Poly Network was compromised, and more than $600 million worth of cryptocurrencies was stolen in what was termed as one of the greatest crypto heists. Despite the attacker returning the stolen funds, the hack shed limelight on the cybersecurity weaknesses faces by DeFi platforms and cryptocurrency exchanges.
A few weeks before the incident, ThorChain suffered two simultaneous attacks where significant amounts of cryptocurrencies were stolen.
On Tuesday, SushiSwap was spared from being the victim of another major hack. A white-hat hacker reached out to SushiSwap to notify them of a vulnerability that, if exploited, would cost the DeFi platform $350 million. The post published by SushiSwap stated that the white hat hackers reached out to notify them of a big on the platform’s Miso fundraising platform that could lead to the loss of ETH tokens. However, the team fixed the bug in less than five hours.
The increased rate at which crypto platforms are being hacked could cause detrimental harm to this sector, given that regulatory scrutiny is at its peak. Last month, the US Securities and Exchange Commission (SEC) chief, Gary Gensler, pointed out the need for regulations in the DeFi sector. According to Gensler, these regulations would help protect investors who are most vulnerable to losses.
These hacks also come at a critical time for the DeFi and crypto sectors, given that adoption is at its peak. Many institutions and retail players have embraced this sector, and the recent market rebound has only fuelled adoption. However, these hacks threaten the success of this sector, as not taming them would erase most of the gains that this sector has achieved this year.
However, the recent events on the Poly network have revealed that hacks related to cryptocurrencies can be difficult, especially when the intrusion is realized early enough and different platforms collaborate to freeze the funds. Public blockchains such as Bitcoin enable law enforcement to trace these funds, making it almost impossible for hackers to hide their footsteps.
However, privacy coins such as Monero, which guarantee 100% anonymity, have become a commonly used tool by hackers, as they cannot be traced. Nevertheless, the rise in cryptocurrency-related hacks is bound to attract the attention of law enforcement agencies and regulators if the trend continues, given that millions of investor funds are at risk of loss if the attacks are untamed.