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Bitmart pledges to reimburse hack victims as crypto community expresses support

As regulatory uncertainty continues to plague the global digital asset ecosystem, There are many proponents of cryptocurrencies who continue to insist that the industry as a whole has a long way to go when it comes to protecting itself. in a way that is comparable to the traditional financial system. Now, with the recent Bitmart hack coming to light, these individuals have received even more arguments.

To recap, On December 5, crypto exchange Bitmart was the victim of a major hack that caused the platform to lose nearly $ 200 million through an online wallet compromise, hosted on the Ethereum blockchain and the Binance Smart Chain.. The breach was first exposed by blockchain security firm Peckshield, whose cybersecurity team revealed that infamous characters were able to initially transfer around $ 100 million through the Ethereum blockchain, followed by another concurrent hack of $ 96 million using the BSC reserves of the cryptocurrency exchange.

The hackers were able to accumulate more than 20 tokens, including a number of altcoins. such as Binance Coin (BNB), SafeMoon (SAFEMOON), BSC-USD, and BNBBPay (BPay). They were also able to steal not inconsiderable amounts of meme tokens, such as Baby Doge Coin (BabyDoge), Floki Inu (FLOKI) and Moonshot (MOONSHOT). According to the PeckShield security team, the entire scheme can claim to a simple “transfer, exchange (or swap) and wash” maneuver.

Bitmart responds

To better understand how the entire incident came about, Cointelegraph contacted Bitmart. A spokesperson for the trading platform noted that as soon as the gap was discovered, the company took steps by shutting down multiple systems to “limit any kind of immediate damage”; Actions included stopping token withdrawals as well as not allowing users to trade certain pairs. The representative added:

“We plan to continue to gradually restore services, but only after our security team conducts a thorough testing process. Security remains our No. 1 priority.” In fact, as of Tuesday, December 7, 2021, Eastern Time, we have resumed deposits and withdrawals of ETH and ERC20 tokens. “

Furthermore, a written response from the exchange also highlighted that To bolster its native security infrastructure, Bitmart had replaced all of its token deposit addresses in relation to currencies such as Bitcoin (BTC), Ether (ETH), and Solana (SOL), as well as all the other tokens involved in the incident. “We have also notified our users of the relevant changes,” the statement said at the end.

Finally, on December 6, Sheldon Xia, founder and CEO of BitMart, advertisement through Twitter that the exchange was going to use its own funding to make up for any losses arising from the incident: “We are also speaking with multiple project teams to confirm the most reasonable solutions, such as the exchange of tokens. No user assets will be harmed.”

The cryptocurrency community shows solidarity

Following the nearly $ 200 million hack, Members of the Shiba Inu (SHIB) global community and crypto exchange Huobi Global were quick to offer Bitmart whatever help the exchange needed., not only to harden your existing security setup, but also to keep precise control of your lost asset entries.

Speaking to Cointelegraph, Huobi’s chief global strategy officer Jeff Mei noted that in cases like Bitmart, it is necessary to prioritize transparency and immediate action, and added:

“Exchanges must alert their users, other exchanges and law enforcement authorities as soon as possible and be transparent about what they are doing to manage hacking and loss of user funds.”

Furthermore, Mei stressed that users should avoid putting all their assets together on a single platform or a single wallet, and in cases where they feel that something suspicious may be happening, users should not hesitate to contact the corresponding exchange and tell them about the possible security incident.

Like Huobi, The Shiba Inu community also confirmed their intentions to help Bitmart, adding that they had already stepped up their efforts to review any potential security threats to ShibaSwap., a decentralized exchange (DEX) built by the community.

More education is needed

Raimundo Castilla, CEO of digital asset custody platform Prosegur Crypto, told Cointelegraph that what happened to Bitmart with its recent security breach was something easily avoidable only if the users of the platform had been educated enough to keep their digital assets externally and not on the exchange itself:

“Online wallets should be reserved only for the funds you want to trade with. This amount of money should have been kept in offline storage with a compressed air system and 100% offline transactions.”

However, Castilla added that For platforms like Bitmart to avoid future incidents, they need to employ a combination of innovative technologies along with rigid governance protocols.. For starters, your private keys should not have been kept online, since everything that is stored online is susceptible to attack regardless of how well protected it is. “They should have worked with whitelisting so that even if someone had access to any private key, they could only send funds to a pre-confirmed wallet address”, He said.

Also, Bitmart could have employed an advanced multi-party cofirmation system (MPC, for its acronym in English) that made use of a multi-signature approval module. This would have required hackers to need multiple people to approve the transactions in question.

Castilla added that: “Hacking a single private key can do nothing at all.” What’s more, someone playing the role of key account manager could have stepped in and “stopped the transaction to get to the customer and see if it was legitimate”.

The need for better security measures

With the cryptocurrency ecosystem seemingly under continuous attack from nefarious hacking incidents, it is worth noting that recently Digital asset lending platform Celsius also confirmed that it had faced a loss of $ 50 million through an exploit related to the decentralized finance protocol (DeFi) BadgerDAO..

The reports of the attack appeared for the first time on December 9, when the protocol developer team announced that they had received “multiple unauthorized withdrawal transfers” related to their clients. Afterward, they put all of their existing smart contracts on hold to mitigate further potential losses.

That said, it hasn’t all been bad news recently, as Synapse Bridge cross-chain protocol revealed that on November 9, its security team was able to prevent a multi-million dollar exploit in the Avalanche Neutral Dollar (nUSD) metapool., preventing criminals from seizing nearly $ 8 million in digital currencies.

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