In a wave of cybersecurity threats recently pummeling the digital asset ecosystem, Wintermute turned out as the latest victim after it recorded a £140 million loss to hackers.
Evgeny Gaevoy, Wintermute’s CEO, announced the incident on Tuesday, adding that a white hat hacker had coordinated the breach. He, however, doused fears of a possible insolvency issue, adding that the company is capable of compensating all customers affected by the hack.
Before the hack, a $200 million debt hung over the London-based crypto market maker, with over 33% due for repayment in three weeks.
Gaevoy has expressed willingness to negotiate with the hacker —an odd tradition common within the crypto space— and possibly offer some payment to recoup lost funds.
In what appears to be a month-on-month reoccurrence, Wintermute’s hack follows after the August Nomad Bridge attack, which cost the platform $190 million. Such hacks trace to the root of the much prized open source structure, which is DeFi’s greatest strength and has become its biggest weakness.
According to the chief information security officer of Check Point Software, a cyber security firm, Deryck Mitchelson, attacks on crypto exchange platforms, especially Decentralized Finance (Defi), are increasing.
Deryck’s views are corroborated by a Chainalysis mid-year report which pegs DeFi’s total hack losses in 2022 at $1.9 billion. A similar report by blockchain security company Pecksheild notches the figure higher at $2.3 billion from a record 153 attacks. With less than four months to 2023, total cybersecurity break-ins already surpassed the halfway mark on last year’s $3.2 billion record steals.
Wintermute’s heist unseats Elrond’s $113 million steal as the fifth biggest hack of 2022, topped by the trio of Beanstalk Farming ($182 million), Wormhole ($190 million) and Nomad bridge ($320 million) attacks. Axie Infinity’s native sidechain network, Ronin, still holds the record for DeFi’s biggest ever steal after a grand scale exploits in March left the network bereft of $620 million.
For all the progress crypto has made onboarding over 320 million faithfuls, DeFi remains its most significant source of scepticism for new entrants. “The wild west”, as many would call it, DeFi’s $57 billion juicy market valuation remains a final point for constant target by hackers who have so far ripped $2.3 billion off the market this year alone.
Unsurprisingly, over half of these stolen funds were reportedly laundered through the highly embattled crypto mixing platform, Tornado cash, fuelling scepticism on the platform’s role in promoting crypto adoption.
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