Deribit halts withdrawals after $28M hot wallet breach

By: Michael Wilson

November 2, 2022 12:45 PM

Deribit, a major cryptocurrency derivatives market, has blocked withdrawals following a $28 million hot wallet attack.

The Deribit exchange announced on Twitter that their hot wallet was hacked just before midnight UTC on November 1.

The exchange assured its customers that their money was safe since Deribit had enough reserves to handle any losses that might occur.

"Nothing will happen to client funds, Fireblocks, or the locations of any cold storage facilities. To mitigate the effects of such occurrences, our firm policy mandates that we store 99 percent of all user cash in cold storage."

Deribit has to block withdrawals until the exchange is certain that security has been restored to 100% following the attack, and this includes withdrawals from custodians Copper Clearloop and Cobo. The company reassured customers that their deposits would be credited to their accounts after receiving the necessary number of confirmations.

Trading on Deribit appears to be proceeding normally, as reported in the platform's official Telegram channel. One member of Deribit's support team mentioned that the company's "hotwallet policy" helped keep customer funds to a minimum.

Since the exchange is also covering the loss, Deribit's insurance fund won't be touched by the hack. The company "remains financially sound," the statement says, and "ongoing activities will not be disrupted."

Deribit plans to restart withdrawals as soon as possible, according to a company spokeswoman, and is now reviewing "all security measures." Also, the platform is currently conducting an in-depth incident analysis to shed light on the potential weakness that led to the issue, the source said.

According to the company's spokesman, this was the first time Deribit had been hacked and suffered damages like this since the company's inception.

Deribit, which launched in 2016, is a major platform for trading cryptocurrency futures and options. According to data compiled by CoinGecko, daily trade volume for Deribit stands at $280 million as of this writing.

Certain parts of the Deribit website don't seem to be working at the time of this writing, either. The company's crypto data hub, Deribit Insights, is currently unavailable due to a "major problem on this website." Meanwhile, Deribit's trading platform remains operational. A spokesman from Deribit has stated that the hack and the website issue are unrelated.