Crypto futures and options exchange Deribit suffered a security breach around midnight on Tuesday, with hackers making off with nearly $28 million from the exchange’s hot wallet.
Exchanges often use hot wallets to process withdrawals immediately. However, such wallets come with high risks, since their private keys are stored on a company’s servers to sign withdrawal transactions.
In a statement on Twitter, the Panama-based exchange stated that its wallet was hacked for $28 million, but client assets and cold storage addresses were not affected.
While almost $28 million has been stolen by the hacker, Deribit noted that “the hack is isolated to their BTC, ETH and USDC hot wallets.”
The hacker made 691 BTC and 9,111.59 ETH from the hack, with USDC the grip to be quickly converted to Ethereum. The funds are now held in two cross wallets Bitcoin and Ethereum. The funds are not being moved to any mixer (or) money laundering service at the time of writing.
The company has assured users that they are still in a “financially sound position” and the reserves cover the loss without affecting the insurance fund.
Deribit pauses withdrawals
By the way tired that “they carry out ongoing security checks” and have stopped withdrawals from the stock exchange.
The company has also advised against putting in new funds. Deribit said that “Deposits that have already been sent will continue to be processed and after the required number of confirmations will be credited to accounts.”
The derivatives exchange is also a victim of insolvency by the investment company Three Arrows Capital (3AC).
Decrypt has contacted Deribit for a timeline of the ongoing security checks and will update this story if the company responds.
Stay up to date on crypto news, get daily updates in your inbox.
