The Solana attack targets thousands of crypto wallets, costing users more than $5 million

Nearly 8,000 digital wallets have been tapped for just over $5.2 million in digital coins, including Solana’s sol token and USD Coin (USDC), according to blockchain analytics firm Elliptic. Twitter account Solana Status confirmed the attack, noting that as of Wednesday morning, approximately 7,767 wallets were affected by the exploit. Elliptic’s estimate is slightly higher with 7,936 wallets.

Solana’s sol token, one of the biggest cryptocurrencies after bitcoin and ether, fell about 8% in the first two hours after the hack was first discovered, according to data from CoinMarketCap. It is currently down approx. 1%, while the trading volume is up approx. 105% in the last 24 hours.

As of Tuesday evening, several users began reporting that assets held in “hot” wallets — that is, Internet-connected addresses, including Phantom, Slope and Trust Wallet — had been drained of funds.

Phantom continued Twitter that they are investigating the “reported vulnerability in the solana ecosystem” and do not believe it is a phantom-specific issue. Blockchain audit firm OtterSec tweeted it the hack has affected several wallets “on a wide variety of platforms.”

Elliptical chief researcher Tom Robinson told CNBC that the root cause of the breach remains unclear, but “it appears to be due to a bug in certain wallet software, rather than the solana blockchain itself.” OtterSec added that the transactions were signed by the actual owners, “suggesting some sort of private key compromise.” A private key is a secure code that gives its owner access to their crypto holdings.

The identity of the attacker remains unknown, as does the reason for the exploit. The breach is ongoing.

“Engineers from multiple ecosystems, with help from multiple security firms, are investigating drained wallets on Solana,” according to Solana Statusa Twitter account that shares updates for the entire solana network.

The Solana network strongly encourages users to use hardware wallets, as there is no evidence that they have been affected.

“Do not reuse your seed phrase on a hardware wallet – create a new seed phrase. Empty wallets should be treated as compromised and abandoned.” reading a tweet. Seed phrases are a collection of random words generated by a crypto wallet when it is first set up, and it provides access to the wallet.

A private key is unique and links a user to their blockchain address. A seed phrase is a fingerprint of all of a user’s blockchain resources that is used as a backup if a crypto wallet is lost.

The incident comes a day after the $200 million hack of blockchain bridge Nomad. It is the latest crisis to grip the crypto market in recent weeks.

“Four addresses are currently linked to the hacker, a far cry from yesterday’s ‘decentralized looting,’ which involved over 120 individual users,” Deutscher said. “This implies that there was a singular party that carried out the SOL exploit, although the specific details remain ambiguous.”

The Solana network was seen as one of the most promising newcomers to the crypto market, with backers such as Chamath Palihapitiya and Andreessen Horowitz touting it as a challenger to ethereum with faster transaction processing times and improved security. But it has faced a number of problems recently, including downtime during periods of activity and a perception of being more centralized than ethereum. A major blackout in June knocked the Solana platform offline for several hours.

Ether, the native token of the ethereum blockchain, climbed 6% in 24 hours.