Breaking: Deribit loses $28 million worth of cryptocurrencies to a hack

Deribit, a crypto futures exchange, lost $28 million worth of cryptocurrencies, in a recent hack on its platform. The exchange has assured users that the insurance fund remains unaffected and losses will be covered from company reserves. 

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Deribit hacked for $28 million before the midnight hour on November 1

Deribit exchange announced that the platform’s hot wallet was compromised to a hack before midnight on November 1, 2022. The exchange primarily focuses on options trading. The loss of $28 million in various cryptocurrencies was confirmed.

While the platform has an insurance fund, Deribit announced that all client funds are safe and losses incurred from the hack are covered by company reserves. The exchange assured users that necessary steps are being taken to issue refunds to affected parties. 

Deribit is working on security checks and investigating the incident, in the meanwhile it has halted withdrawals to third-party custodians. The exchange will announce the completion of the security check and the resumption of withdrawals to custodians Copper Clearloop, Cobo, and others. 

Client assets and cold storage addresses of the exchange remained unaffected by the hack. The company disclosed that it is a procedure to keep 99% of user funds in cold storage to limit the impact of a security breach or hack. Therefore, the event was isolated and quarantined to Bitcoin, Ethereum and USDC hot wallets.

Deposits that have already been sent will be processed after the required number of confirmations are completed. The number of confirmations required has been increased in light of the hack, once it is complete funds will be credited to accounts. Users are requested not to send further deposits until the security checks are complete. 

The exchange was quoted in a recent tweet: 

We are performing ongoing security checks and have to halt withdrawals including third-party custodians Copper Clearloop and Cobo until we are confident all is safe to re-open.

The fact that the exchange ensured security of client funds and covered losses from company reserves rather than insurance fund comes as good news to users.