Security concerns around cryptocurrency are long-lived but the recent news of Deribit’s hacking has added a meaningful slug of fuel to the fire.
The leading derivatives exchange was revealed to have lost $28 million in a hot wallet hack earlier this week, with losses centered on Bitcoin, Ether, and USDC. The following (seemingly rushed) company statement followed soon after: “Deribit hot wallet compromised, but client funds are safe and loss is covered by company reserves…Our hot wallet was hacked for USD 28m earlier this evening just before midnight UTC on 1 November 2022“ Withdrawals have now been halted due to ongoing security checks and users have taken to social media to voice their frustration and concern – seemingly unconvinced by Deribit’s promise of insurance. Whilst the exchange continues to manage the fallout, the spotlight on the crypto industry is intensifying once again. A consensus has emerged that exchanges must double down on due diligence to identify systemic weaknesses, whilst maintaining a cast iron grip on user protections. On the system side of the ledger, weaknesses largely rest on withdrawals from user wallets. Large exchanges, in response, would be wise to focus on withdrawal frequency control and logging IP and transaction anomalies.