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CoinEx, a cryptocurrency exchange located in Hong Kong, has disclosed that hackers exploited compromised private keys to steal more than $70 million in tokens, as the team seeks to establish communication channels to recover the funds.
Representatives from CoinEx provided detailed insights into their ongoing investigation to Cointelegraph, as the team endeavors to create and implement a new wallet architecture aimed at restoring affected users and the platform’s functionality.
Although an estimated $70 million in cryptocurrency was taken from the platform, the exchange asserts that this figure constitutes a minor fraction of its total assets under management. CoinEx has indicated that users impacted by the incident will be fully reimbursed for any lost funds.
2/ We’ve finalized our strategy to resume withdrawals and are set to progressively resume these services within 7 working days. Ensuring 100% asset security remains our top priority before reactivating withdrawal functionalities.
— CoinEx Global (@coinexcom) September 18, 2023
CoinEx mentioned that it is still working to identify those behind the security breach, which several blockchain security firms have linked to the North Korean Lazarus Group hackers.
“Additionally, we have opened communication channels to the hackers in hopes of proactive engagement toward a mutually agreeable resolution.”
The exchange clarified that an initial investigation identified the cause as a compromised private key for its hot wallets, which were utilized to store exchange assets for processing deposits and withdrawals.
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To prevent additional losses, CoinEx halted its withdrawal services, addressed system vulnerabilities, and moved the remaining assets from the compromised hot wallets. The exchange informed Cointelegraph that it anticipates gradually resuming withdrawals within seven working days.
“Our team is currently focused on building and deploying an entirely new and robust wallet system to handle activities within the 211 chains and 737 assets.”
As initially reported by Cointelegraph, CoinEx first detected “anomalous withdrawals” from one of its hot wallets on September 12, starting with a transfer of 4,947 Ether (ETH). The hackers subsequently began withdrawing significant amounts of other tokens to the same address.
The initial valuation of the stolen funds was estimated at $27 million but has since doubled in the week following the incident.
North Korean hackers have targeted the cryptocurrency sector for several years and have been linked to some of the largest thefts in the industry to date. The 2022 Axie Infinity Ronin Bridge hack alone resulted in over $650 million being stolen.
Blockchain analytics firm Chainalysis estimates that North Korean hackers have pilfered approximately $340 million in cryptocurrency in 2023. This figure is expected to increase with the attribution of the CoinEx hack and a $41 million breach of the cryptocurrency gambling platform Stake on September 4.
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