Crypto.com Hot Wallet Hacked, No Funds Lost Says the Exchange

In a blow to its public image, Crypto.com, the most prominent digital bank in the Asia-Pacific region, was hacked, leaving some customers reporting losses between 2-5 ETH.

A small proportion of the Crypto.com customers had their accounts compromised. The company announced that no funds were compromised, but customers have taken to Twitter, claiming losses of ETH.

Ben Baller, a crypto enthusiast and entrepreneur, claims to have lost 4.25 ETH, the equivalent of $13,924 at the time of press. Baller insisted that he had enabled two-factor authentication, suggesting that the hack could have compromised the exchange’s security measures. After “some digging,” Baller discovered that within the space of six hours, 5,000 ETH had disappeared from an ETH wallet, which is equivalent to about $16M. Dogecoin co-founder, Billy Markus, noted “odd” activity on a Crypto.com Ethereum wallet. Multiple similar transfers of 2-5 ETH went to new wallets.

Crypto.com insisted that no funds were compromised. The company advised users to sign back into their app and exchange accounts and reset their two-factor authentication. One user Matt Nutt, tweeted, “Trying to setup 2FA brings up an error stating “Sorry, there was an unexpected issue. Please try again later or contact support via live chat or [email protected]”… What’s going on?! :(.”

Customer support responded with, “Hello there. Please DM us with your referral code and inquiry. Our team will be glad to assist you with your 2FA setup.”

Withdrawals have been suspended but will be re-enabled once the new security measures have been rolled out.

Blip on the PR blitz

This hack is not good PR for a company that made some major marketing moves in 2021. The company paid $700M for the naming rights to the former Staples Center, home to the Los Angeles Lakers.

The venue has been renamed the Crypto.com arena. The Crypto.com Visa Card was launched in 40 countries. The company also launched a public campaign called “Fortune Favors The Brave,” starring Matt Damon.

Crypto.com offers its services through mobile applications and debit cards. The platform is known as a neobank (a type of digital bank) and was ranked the seventh-most popular neobank in the Asia-Pacific Countries (APAC), boasting 14 million clients in 2021.

Crypto.com holds 100% of user funds in offline cold wallets, using an institutional-grade solution by Ledger, called Ledger Vault. It has insurance for over $750M held in cold storage against physical threats and third-party theft.