There’s a Lot of Thefts Happening

There’s been a lot of hacks or other types of theft in the crypto industry recently, which seems likely to continue harming the industry’s reputation (not to mention all the victims losing their money).

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The narrative

Some $212.5 million in crypto-related funds were hacked or stolen over the past few weeks, the vast majority from a single platform.

Why it matters

It’s hard to imagine regulators being super jazzed about the ongoing plethora of hacks and other thefts. It is a bit harder to imagine how the industry can try and rectify this situation.

Breaking it down

Want to know something wild? A few hours past midnight last Saturday, my colleague Shaurya and I saw that around $4 million worth of ether – 2,500 ETH – had moved out of a wallet associated with last year’s account draining exploit of FTX, which happened a mere few hours after the exchange filed for bankruptcy.

By the end of the weekend, more than $26 million (15,000 ETH) in funds had been moved, mostly into tools and services that will make it more difficult, if not impossible, to track them moving forward. This comes a few days or weeks after a number of crypto platforms, like HTX (formerly Huobi), Mixin and Fortress, all announced they lost funds due to hacks.

Hacks of centralized and decentralized platforms is nothing new. But the fact that they’re continuing to proliferate in these extremely highly-public ways can do nothing but hurt the overall crypto industry’s reputation at a time when, to be quite frank, it already isn’t great.

Maybe one lesson from the last few weeks is that people in crypto – investors and users, yes, but especially builders and funders – need to rethink their attack vectors. For an industry built on “not your keys,” there is an awful lot of reliance on third-party tools and providers, any one of which could be compromised.

Recall that CoinDesk revealed it was one such provider that ultimately led to last month’s $15 million Fortress theft.

Mixin hasn’t, as of earlier this week, revealed who the database provider is. What we do know is there’s an increasing number of service providers of all stripes being attacked. There’s…