Crypto Exchange FTX to Give $6 Million After Users Lose Millions to Phishing Attacks
FTX traders lost millions of cryptocurrencies in an API exploit that allegedly involved crypto trading platform 3Commas.
According to information shared on Twitter by cryptojournalist Colin Wu, on October 19, a user of the Bahamian exchange noticed that his account was behaving suspiciously, trading DMG tokens over 5,000 times.
Shortly after, the owner discovered that his account already had lost Bitcoin, Ethereum and FTX token worth $1.6 million.
At first, the incident appeared to have been an isolated one, but that was not the case, as a few days later another trader also posted on Twitter that he lost $1.5 million on the exploit.
Colin Wu said at least four FTX account holders were victims of the cyber attack which is apparently being blamed on 3Commas.
FTX offers one-off compensation to affected account holders
Sam Bankman-Fried, a crypto billionaire and CEO of FTX, was quick to announce decision by his company to provide a one-time compensation to affected merchants that he described as “phishing of a third-party website.”
The digital currency exchange top honcho said it will allocate $6 million to replenish the losses of its users. However, he said this is a one-time deal as they refuse to make a habit of compensating clients for phishing exploits carried out on non-FTX sites.
13) However, in this particular case, we will compensate the affected users.
THIS IS A ONE TIME THING AND WE WILL NOT DO THIS IN THE FUTURE.
THIS IS NOT A PEDID.
We will not make a habit of compensating for usage that is phished by fake versions of other companies!
— SBF (@SBF_FTX) 23 October 2022
Meanwhile, Bankman-Fried added that they are prepared to exonerate the hackers if they return 95% of the stolen funds.
He even suggested a “5-5 standard” for the attackers, saying that crypto-hackers can either keep 5% of the total amount they have stolen from the project or $5 million, whichever is less.
We investigated reports that some user accounts were compromised and investigated with FTX – we found that the issue is likely related to phishing. Read more here: pic.twitter.com/pmosstfrGi
— 3 commas (@3kommas_io) 21 October 2022
3Commas denies involvement in exploitation
Crypto trading platform 3Commas strongly denied being involved in this particular effort and continues to be free from all guilt.
The company said several affected FTX users were never 3Commas customers and that the security breach did not originate with their services.
“We investigated reports that some user accounts were compromised and investigated with FTX – we found that the issue is likely related to phishing,” the company’s post on Twitter said.
Investigations conducted revealed that there were API keys linked to newly created 3Commas accounts that were used for unauthorized trading of DGM tokens.
The platform clarified that these keys were not from them and were linked by users to websites impersonating the trading platform.
Crypto total market cap at $886 billion on the daily chart | Featured image from Spencer Heyfron/Fortune, Chart: TradingView.com
