Arthur Cheong Loses $1.6 Million in NFTs Following a Hot Wallet Hack

In the latest cryptocurrency hack, DeFiance Capital founder has lost $1.6 million in NFTs and crypto. Arthur lost 78 NFTs from various collections, but most appear to be Azukis. Additionally, 68 Wrapped Ether (WETH), 1,578 LooksRare tokens (LOOKS), and 4,349 Staked DYDX (stkDYDX) were lost.

Hot Wallets Indeed Unsafe, Arthur Declares

The attacker began to move the assets at around 12:30 AM UTC and immediately put up all the NFTs for sale on the OpenSea NFT Marketplace. At the time of writing, the attacker’s wallet had 545 ETH worth approximately $1.6 million.

The big name in the DeFi space has since come out to reveal the likely cause of the attack.

“Found out the likely root cause for the exploit, it’s a targeted social engineering attack. Received a spear-phishing email that really seems to be sent by one of our portco with content that seems like general industry-relevant content. They are likely targeting all crypto peep.” The investor revealed in a tweet.

In the wake of the attack, Arthur is convinced that hot wallets are unsafe when dealing with the self-custody of crypto assets. He revealed in another tweet that initially, he had been pretty careful and only used hardware wallets on PC. He, however, switched to hot wallets when he began trading NFTs more regularly.

In any case, Arthur may still not have prevented the attack had he used a hardware wallet. Notably, hardware wallets are not always connected to the network, which keeps a holder’s private key and seed phrase safe from intrusion. However, Arthur believes that his attack occurred following a transaction he did on-chain, which could have compromised a hardware wallet’s private key or seed phrase.

Arthur Receives Crypto Community Support

The crypto community has since come out to help Arthur retrieve the stolen assets. Arthur had asked people to block the hacker’s wallet, and several users on Twitter have attempted to unearth how the hack happened and where the attacker gained access to Arthur’s wallet.

Cirrus, an NFT community member, even bought two of the stolen NFTs (Azukis) and is offering to return them to Arthur at a cost. Cirrus notes that he could quickly sell the NFTs for 6-8 ETH profit, but that isn’t right. As his profile reveals, Cirrus has also been a victim of hacks, which is probably what guides his sympathies.  He is a three-time rug pull victim.

Rug pull is when a cryptocurrency project closes down suddenly, and the value of its token drops without warning. They are usually confirmations of crypto scams.

Arthur Releases some Stern Words

It’s seemingly a gold rush for hackers, but Arthur could be up against his attackers. In the wake of his loss, the investor has left a few but stern words for the hacker.

“The only thing I can say to the hacker is: you mess with the wrong person,” he said in a tweet.