A hot wallet of the largest cryptocurrency derivatives exchange has been hacked, resulting in a loss of $28 million.
Crypto derivatives exchange Deribit said the hack took place just before midnight UTC on Nov. 1, Deribit assured clients that their funds were safe, and that the exchange’s reserves are covering the losses.
Exchange Hacked: BTC, ETH and USD Coin Targeted
Deribit said that the hack exclusively affected hot wallets for Bitcoin, Ethereum and USD Coin. The exchange added that these have been isolated and quarantined. Consequently, Deribit affirmed that most client accounts, such as Fireblocks, were not affected.
Since the hack only affected these hot wallets, Deribit also emphasized that any assets in cold storage were completely safe. The exchange added that it keeps 99% of clients’ assets stored in cold wallets to limit the scope of such an attack.
Deribit affirmed that its insurance fund has not been impacted, as the company’s reserves are able to cover the loss. Although the exchange said it is continuing to operate, it is implementing several security measures for now. For instance, it said it would have to temporarily suspend withdrawals, even for third-party custodians Copper Clearloop and Cobo.
However, Deribit confirmed that it was still processing deposits customers had already deposited, albeit at a somewhat slower pace. It said it has had to raise the minimum number of confirmations required to complete transactions, which may cause delays.
Twitter User Share Their Views
In response to the announcement, the chief executive of crypto exchange Binance Changpeng Zhao said his company would help. He said his team would monitor incoming funds and freeze any that arrived from Deribit.
One Twitter user speculated co-founder of defunct crypto lender Three Arrows Capital Zhu Su could be trying to recoup losses. Su was a contributing author to Deribit, which liquidated 3AC’s positions when the crypto hedge fund failed to meet margin calls earlier this year.
Deribit recently completed a $40 million funding round, which put its valuation at roughly $400 million. We are performing ongoing security checks and have to halt withdrawals including third-party custodians Copper Clearloop and Cobo until we are confident all is safe to re-open.”
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