In a rather unfortunate development on Tuesday, popular crypto exchange CoinEx fell victim to a hack, resulting in significant losses from its Ethereum (ETH), TRON (TRX), and Polygon (MATIC) hot wallets.
According to investigations, around $27 million has been stolen already. CoinEx has confirmed the incident and has reportedly set up a team to investigate the issue.
Note that the problem of hacks and breaches has always been rampant in the crypto space and the same CoinEx was a victim of a hack in 2014 which resulted in a loss of all its Bitcoins.
The CoinEx hack
On Tuesday, prominent crypto exchange CoinEx experienced abnormally large outflows to an address with no prior history, leading security experts to suspect the exchange was hacked.
Around 2:21 pm WAT, a known CoinEx hot wallet transferred around 4,947 Ether (worth $7.9 million at the time) to an Ethereum account. The receiving account had no prior history before this transaction. Immediately after this transaction, the CoinEx hot wallet began transferring large amounts of tokens to the same address. Approximately 408,741 DAI stablecoin, 2.7 million Graph (GRT) tokens, 29,158 Uniswap tokens and many other tokens were transferred from the wallet.
Blockchain security firm, PeckShield reported the outflow as “suspicious.” CryptoQuant head of research, Julio Moreno also claimed that the behaviour of the wallet was “strange,” as Ether reserves “are now basically zero ETH.”
Later on around 6:30 on Tuesday, CoinEx confirmed the hack in a post on X (formerly Twitter), revealing they had immediately set up a special investigative team to investigate the issue.
“Our Risk Control System detected anomalous withdrawals from several hot wallet addresses used to store CoinEx’s exchange assets. A special investigative team has been appointed to determine what happened.”
Also, the digital currency exchange noted that the affected funds were just a small portion of its total assets. It further assured customers that it would cover the losses out of its pocket, and users would receive 100% compensation for any loss due to this breach despite the exchange’s ether reserves now being “basically zero”.
“All deposits and withdrawals are temporarily disabled and will be restarted after a thorough review.” CoinEx stated.
CoinEx 2014 hack
Apart from the internal issues the crypto ecosystem continues to face, another major challenge that continues to erode the trust it has garnered is the issue of hacks and vulnerabilities.
In recent years, a series of multimillion-dollar hacks has rattled investor confidence in crypto markets and prompted many investors to become increasingly wary of where they store their holdings. Billions of investors’ dollars were lost to Terra and FTX crash last year and till now, no adequate compensation has been carried out.
Last year, Axie Infinity’s Ronin Bridge experienced a $625 million loss and earlier this year, Singapore-based exchange Bitrue was exploited for $23 million.
Recall that in 2014, this same CoinEx was hacked, resulting in the theft of all the Bitcoins in its possession. However, the exchange covered the losses out of its own pocket. Earlier this year, CoinEx stopped serving all United States customers due to regulatory concerns.
Eyes are now on the exchange as it navigates this difficult situation.
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