Deribit Hot Wallets Hacked for $28 million

Deribit, a crypto options and futures trading exchange, announced on Twitter that it had undergone a hot Wallet compromise as the hackers made away with $28 million worth of clients’ funds. 

Deribit Loses $28 Million

The exchange explained that the hack took place on November 1, 2022. Deribit has further claimed it will compensate the lost funds through its emergency reserve funds, meaning that the insurance fund will not be affected in any way. The hackers executed the act on BTC, ETH, and stablecoin USDC hot wallets that have since been isolated for further investigations.

Deribit Tweeted:

“Deribit hot wallet compromised, but client funds are safe and loss is covered by company reserves Our hot wallet was hacked for USD 28m earlier this evening just before midnight UTC on November 1 2022.”

According to the tweet, Deribit’s cold storage wallet addresses, including the Fireblocks storage address, were not affected by the malicious hack. The exchange has suspended all transactions, including deposits and withdrawals, to conduct further investigations and prevent additional cyber-attack damages following the breach. 

Deribit Further Tweeted:

“Client assets, Fireblocks or any of the cold storage addresses are not affected. It’s company procedure to keep 99% of our user funds in cold storage to limit the impact of these type of events. The hack is isolated & quarantined to our BTC, ETH and USDC hot wallets.”

The tweet further claimed that the company was still in a financially stable position to continue normal operations after The decentralized exchange had resolved the issue. This is because Deribit encourages 99% of transactions conducted in cold wallets. Freezing assets in cold wallets reduces withheld funds’ susceptibility to attacks and security breaches. The company discouraged users from sending funds to their Hot wallets until deposits finally opened.

More Hacks Flood The Crypto Market

Deribit’s $28 million hack follows a series of hacks that have flooded the crypto space since the bear market began. In October alone, Decentralized Finance Protocols suffered a whopping $800 million loss in cyber attacks alone.

October went down in history, with the highest exploits happening in less than 24 hours. October 11, 2022, suffered four exploits that cost more than $120 million to the DeFi protocols involved. 

Mango Markets was among the recent victims, reporting $117 million worth of funds stolen. TempleDAO was also breached, and the hackers made away with $2.3 million. QANplatform tweeted the same day (October 11, 2022) that its smart contract link had been compromised and the hacker had seized 1.46 billion 

QANX tokens valued at approximately $1.8 million at the time of the breach. Additionally, RabbySwap lost $200,000 due to hackers manipulating the smart contract’s vulnerability.

In virtual currency options trading, Deribit remains king. With its current headquarters in Panama, the Dutch derivatives exchange holds 89.76% of the market for Bitcoin options. Deribit has a staggering 96.64% market share, effectively dominating the Ethereum options industry. 

The hack doesn’t heavily impact the company’s finances, but successive and consistent attacks will put the exchange under immense financial pressure. Derebit has also tweeted the current wallet address where the funds settled and it appears that no withdrawals have been initiated since the attack.

 As November unfolds, the Crypto community hopes to face less malicious hacks as well as recover from the ongoing bearish sentiment.