lcx loses in hot wallet compromise

LCX Loses $6.8M In A Hot Wallet Compromise Over Ethereum Blockchain

LCX is a crypto exchange platform based in Liechtenstein. Just recently, the company made headlines as it confirmed that one of its hot wallets has been compromised. This shocking announcement came in just after the exchange platform had suspended all withdrawals and deposits on the platform, but you can still know and find out the best platform at chesworkshop.org.

A blockchain security company known as PeckShield first noticed the hack. PechShield discovered that a suspicious transaction was sanctioned which saw the transfer of ERC-20 tokens from the exchange platform to an unidentified ETH wallet.

LCX soon verified the hack and confirmed the hot wallet compromise. The exchange platform declared openly the loss of several digital coins such as USD Coin (USDC), Ether (ETH), and its native LCX token.

According to the investigation carried out by PeckShield, LCX lost a total of $6.8million following the hacker’s successful attempt. A total of eight different tokens were transferred to an unknown ETH wallet. These include Quant (QNT), Enjin Coin (ENJ), Sandbox (SAND), Maker (MKR), and Chainlink (LINK).

At the time of this publication, LCX has not announced any plans to reimburse the stolen assets. However, the exchange platform has assured its customers that more stringent security measures will be taken to secure other assets and wallets.

After the announcement, the crypto exchange platform thanked its clients, other platform’s security experts, and the crypto community at large. LCX asserted it is grateful for their support as they face the difficult situation. However, LCX failed to make any comment when Cointelegraph asked for comments.

Hacks Becoming All Too Frequent

Hot wallet hacks are growing to be a menace within the crypto space. Just recently, December 5, 2021, to be precise, Bitmart lost two crypto-assets (BSC and ETH) worth more than $190M when two of its hot wallets were hacked. So far, so good, Bitmart has promised every one of its affected clients to refund their stolen funds. But, clients are beginning to get impatient and anxious.

On the 11th of December 2021, another crypto firm known as AscendEX also halted deposits when its hot wallet was hacked. According to the data available, more than $70M with BSC, Polygon, and ERC-20 tokens were stolen.

A Japanese crypto exchange platform, known as Liquid Global also confirmed their hot wallet was hacked in August 2021. Since then, the exchange has transferred all crypto assets in cold wallets while dispensing withdrawals and deposits.

ImmuneFi, a security platform after carrying out some research discovered that crypto firms lost more than $10 billion in 2021. These funds were lost to scams, various malicious activities, and hacks. According to a report from Cointelegraph, immuneFi noted approximately 120 examples of rug-pulls and crypto exploits.

The biggest of these hacks is into the Poly Network which saw the exchange lose more than $600 million. Next to the Poly Network is the Venus crypto exchange and BitMart with a loss of $200 million and $150 million, respectively.

Why Hot Wallets Hack?

Hot wallets are crypto wallets that are constantly in connection with the cryptocurrency network and the internet. They come in various types which include mobile wallets, desktop wallets, and web-based wallets.

Primarily, hot wallets are used to receive, send, and store digital coins on various exchanges. These wallets also enable investors to monitor and view the number of digital assets available.

Courtesy of their constant connection to the internet, hot wallets are very easy to use and navigate since they are constantly online. However, this comes at a price. Because of this constant connection to the internet, hot wallets are vulnerable to cyberattacks and hacks which in several cases have been successful.

To this end, a lot of exchanges now store a significant percentage of clients’ funds in cold wallets which is a safer type of wallet. Cold wallets are offline and usually in the form of USB drives known as hardware wallets. Since these hardware wallets are offline, they are 100% immune to hacking.

Conclusion

Since LCX made the announcement, the LCX token took an initial nosedive falling by 9.8%. But at the time of this writing, the token is recovering pretty well.

Importantly, LCX not commenting on how they plan to reimburse clients is quite bothersome. Hopefully, the exchange has a solid plan to compensate their clients affected by the hack.

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