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Panama-based Crypto Exchange Deribit reopens after it became the latest in the list of companies to be hit by hackers. They lost $28 million from their hot wallet just before midnight on November 1st.
Fortunately, Deribit had the foresight to keep 99% of its funds in cold storage, meaning only the 1% in its hot wallet was vulnerable. Confirming this, Deribit's chief commercial officer, Luuk Strijers, said, "Hackers have gained access to our wallet server, which enabled them to initiate withdrawals from our hot wallet. We keep 99% of our assets in cold storage and only 1% in hot wallets. The hacker gained access to these hot wallets."
Strijers went on to confirm that the loss would be covered by the company's balance sheet and not by their $40 million insurance fund. As a result, client assets were not affected, but withdrawals were suspended for a few days.
Deribit was quick to discover the hack and acted promptly. They suspended trading for a couple of days, but earlier today, they announced that withdrawals for $ETH, $BTC, and $USDC were once again open for business. This followed an earlier announcement that withdrawals on third-party custodians Cobo and Copper Clearloop had resumed.
Deribit migrated all their hot wallets to Fireblocks, meaning all their deposit addresses have changed, and users need to create new deposit addresses. A forensic blockchain company is assisting with the tracking and recovery of assets.
In addition, it is liaising with worldwide law enforcement officers. The company reiterated that there are no signs of client information being breached.
Crypto users must understand the difference between hot and cold wallets. It's all about striking a balance between security and functionality. Hot wallets are faster to use and facilitate the easy trading and spending of your cryptocurrencies. However, they are vulnerable to cyber-attacks because they are connected to the internet. On the other hand, cold wallets are not connected to the internet and are much more secure; they are, though, less convenient.
This year has been a bad year for crypto hacking.
Substantial cyber attacks in October led to the month being branded as Hacktober. In total, $ 3 billion was stolen in 2022. There were 44 exploits in the month of October, which affected 53 protocols. Although experts recovered $100 million, the hackers still got away with a whacking $760 million, bringing the total losses for the year to $2.98 billion. This figure has seen the 2021 total of $1.55 billion almost doubled.
The big hits for the year were the BNB Chain hack which cost $586 million, and Solana's Mango Markets, which took a hit of $100 million. It has created much uncertainty in the markets. It is the biggest single issue facing crypto companies for the coming year.
Anyone considering investing in crypto at this time must exercise extreme caution. Use cold wallets, only deal with respectable companies, and always carry out due diligence.
Following on from The Merge, Ethereum's developers took a month's break. They announced that, "Shanghai," the next upgrade, will focus on tying up loose ends. The complete list is available for viewing on their official GitHub. Users will be disappointed to see that the expected Proto-Darkshanking feature is unlikely to be included. Users expect it to reduce gas fees. The Proto-Darksharding feature, once finalized, will be the first step in the company's long-awaited move to sharding. Sharding divides the network into "shards" to increase capacity and reduce fees.
Convinced that decentralization is the future of finance, France, Switzerland, and Singapore started project Mariana. The project automates foreign exchanges to reduce cross-border payment charges. The Bank for International Settlements (BIS) stated on its website, "DeFi and its applications have the potential to become systemically important parts of the financial ecosystem." Adding, "Automated market makers could become "the basis for a new generation of financial infrastructure."
In an arrangement announced this week, Ethereum crypto wallet developer MetaMask and gaming developer Game7 introduced their Web3 game launcher, HyperPlay. Gamers playing on any HyperPlay game can carry in-game NFTs and achievements in their MetaMask wallets, allowing interoperability between different games. HyperPlay founder and Game7 core contributor jacobc.eth stated, “Players can take assets between games, use them in DeFi, and follow their friends’ wallets.”
Meta announced that Instagram is developing an NFT minting and sale feature through its app. This “end-to-end toolkit” for NFTs will enable users to create and launch their own NFTs for trading through Instagram. Stephane Kasriel, Meta’s Head of Commerce and Fintech, said, “A small group of creators will soon be able to create digital collectibles (NFTs) and sell them right on Instagram.”
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The much talked about Polygon MATIC cryptocurrency platform is directed and discussed to provide a thorough guide to this relatively new kid on the block
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