November 10, 2023 at 17:14 GMTModified date: November 10, 2023 at 17:14 GMT
November 10, 2023 at 17:14 GMT

Poloniex falls victim to a $114m hack

A multi-million dollar hack has exploited crypto exchange Poloniex, resulting in losses that are estimated to be worth around $114million.

A multi-million dollar hack has exploited cryptocurrency exchange Poloniex, which is owned by Tron founder Justin Sun. Hackers drained its hot wallets, resulting in losses that are estimated to be worth around $114million.

The incident was first flagged by blockchain security firms PeckShield and Cyvers when they noted suspicious activity where crypto assets exited in bulk from one of the exchange’s wallets.

Poloniex was quick to disable the wallet, tagging it for ‘maintenance’ purposes. Sun later confirmed the hack in a post on X (formerly Twitter) saying that his team is currently investigating the incident.

Poloniex maintains a healthy financial position and seeks to fully reimburse the affected funds, promised the owner. It is also exploring opportunities for collaboration with other exchanges to facilitate the recovery of these funds.

As per reports, wallets across multiple blockchains seem to have been targeted by the malicious actors. Data has revealed that an Ethereum wallet, which is now tagged as ‘Poloniex hacker’, sent a total of $114m worth of tokens from Poloniex in 357 transactions. A similar activity was also noted from a wallet on the Tron blockchain, which sent around $42m to various wallets.

Wu Blockchain added: “Before being frozen, the hacker’s Tron chain address transferred large assets such as $21.73 million in USDT, $14.05 million in BTC, $3.65 million in USDD, and $1.78 million in USDC to other addresses, totaling more than US$42.83 million. Only $6.54 million is currently frozen.”

According to data tracking platform Arkham Intelligence, the hacker also bought $20m worth of tron ($TRX). This incidentally also pushed the token’s price up by more than 25%. Another analytics platform Nansen revealed that about 175 tokens, valued at more than $10k, have left the Poloniex exchange.

Sun soon announced via X that the exchange will also be offering a 5% white hat bounty to the hacker. They have been asked to return the funds with a deadline of seven days, after which Poloniex would involve the law enforcement.

Founded in 2013, Poloniex is one of the oldest running cryptocurrency exchanges. After being acquired by Circle in February 2018, it was handed over to a consortium of investors that included Justin Sun.

The exchange provides multiple products like: spot trading and margin trading, futures trading and perpetual swaps, limit orders, crypto staking and so on. It has facilitated $616m worth of trading volume over the past 24 hours, as per CoinMarketCap.

The latest hack adds on to the long list of crypto exchanges that have been targeted by malicious actors. In the month of September, HTX, formerly Huobi, was hacked with a total loss of 500 Ether ($ETH), which was worth around $8m at that time. Sun also holds the position of an advisor to this exchange.

Back in August, Sun helped out Curve Finance founder, Michael Egorov, who faced a looming debt situation following a multi-million dollar exploit of his protocol.

As per blockchain data, he purchased about five million $CRV from a wallet tagged ‘ Founder’. While this was bought at an average price of $0.4 in an over-the-counter transaction, amounting to just over $2.3m, it is more than the $0.37 price level at which Egorov’s loan could be liquidated.

This was when the Curve founder was under much pressure to liquidate his $168m stash of $CRV (Curve’s native token) made through securing loans from multiple DeFi protocols. This amount was equal to almost 34% of the token’s total market capitalisation.