The Singapore-based cryptocurrency exchange, BingX, has officially confirmed that it has incurred minor asset losses through a suspicious outflow of funds from one of its hot wallets. The incident was announced on September 20, when BingX’s technical team discovered abnormal network activity around 4 a.m. Singapore time as an attack on the exchange’s hot wallet.
Immediately after the security breach was discovered, the exchange’s emergency response plan was put into effect,” said BingX Chief Product Officer Vivien Lin while sharing details in a post on X, formerly known as Twitter. It involved the swift movement of assets to safety locations and a temporary halt on withdrawals so as not to lose more on the risk incurred.
“While it is indeed small, minor asset loss still remains, and it’s still being calculated,” Lin said. The major funds remain safe in cold wallets funds that are not connected to the internet to minimize the consequences of such breaches. The majority of the hot wallets, on the other hand, are used mostly for making day-to-day operations, like withdrawals, and hold only a small fraction of the exchange’s total assets.
According to PeckShield, a blockchain security firm, it had detected significant suspicious outflows from BingX and estimated that the loss was above $13.5 million. However, analytics platform Lookonchain showed that the actual loss could be as high as $26 million. Lin, however, put the situation to the public’s knowledge, stating that this loss was manageable, and it would not impact the general business operations of BingX.
The firm said it has temporarily suspended withdrawals to minimize the impacts to users while its systems are being inspected and security measures improved on wallet services. Lin said that withdrawals would resume within 24 hours pending these inspections.
[🛠️ Temporary Wallet Maintenance Notice]
— BingX (@BingXOfficial) September 20, 2024
■ Schedule: ~24 hours
■ When maintenance is done, we will announce it through a notice.
We sincerely apologize for any inconvenience this may cause and appreciate your patience.
Learn more: https://t.co/Tx8PE6H76Q
In addition to the immediate response, BingX is attempting to work on a compensation plan to address losses sustained by its users. Lin reiterated that BingX will “fully compensate” affected customers, ensuring no assets of users would be at risk due to the breach.
However, a few in the crypto space have raised criticism about the exchange. Co-founder of g8keep, the crypto startup, had released his concerns over the handling of the situation at BingX. Harrison Leggio on microblogging site X queried whether the issue is actually “wallet maintenance” or an act of wallets getting compromised.
According to data from EtherScan analyzed by PeckShield, a certain address of the hot wallet of BingX received some millions’ worth of various tokens across multiple blockchains. The wallet reportedly had more than $9.5 million at the time of writing, although this was lower than an earlier all-time high of $13.1 million.
There are some recent transactions from the wallet stating small amounts of crypto transferred through decentralized exchanges like Kyberswap and even exchanges, which are common methods attackers use to obscure the trail of their stolen funds.
The scene, however, will not be the same, as the exchange will try to restore full functionality with returns in the trust account of its users. The situation is closely monitored, and further updates by the exchange will be provided once all aspects of its investigation into the security breach have been finalized.
This incident actually drove home the fact that strong defense mechanisms should be put into place by any exchange, especially when it comes to the handling of hot wallets – these are, after all, more vulnerable to outside hazards. Holding most of the funds in cold wallets and having emergency response systems in place that are rapid have thus allowed BingX to stem the full damage of this breach.
In as fast-paced a digital landscape is expanding as far as threats to financial systems go, the onus on exchanges is to be vigilant and proactive about the safety of users’ assets. Immediate efforts by BingX to compensate affected users reflect responsible risk management in today’s context where threats are becoming increasingly sophisticated.
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Haider Shah