Crypto Exchange Lykke Halts After Hack

Lykke, a crypto exchange platform based in the UK, has halted trading since June 6 due to unauthorized access to its platform. Web researcher SomaXBT initially reported the incident, revealing that the breach occurred two days earlier.

on June 4, @lykke CTX got exploited and lost $19.5 million worth crypto assets but team still trying to hide this fact

BTC (158 btc)
bc1qt64756h9aylujm9tpk826zndegpxtngmr6eqad

ETH (2161 eth)
0x9172a72f5009ca609833819763A2722e53806443 pic.twitter.com/bT4TaQLukY

— SomaXBT (@somaxbt) June 9, 2024

Details of the Breach

According to Taylor Monahan, a developer at MetaMask and an expert in crypto defense, the exchange experienced suspicious outflows amounting to $22 million. Lykke’s cumulative trading volume for the past month was $2.5 million. Currently, users cannot withdraw their assets, with several reporting that their account balances have been completely drained.

Onchain data indicated that half of the stolen assets were in Bitcoin, while the remaining funds consisted of Ether, Litecoin, and Bitcoin Cash. The Ether taken from the exchange was quickly converted into the DAI stablecoin, which was issued by MakerDAO. Meanwhile, the stolen Bitcoin was dispersed across multiple wallets, a common method hackers use to obscure their tracks when laundering stolen funds.

Lykke’s Response

Lykke CEO Richard Olsen addressed the situation in an email to customers on June 6, apologizing for the platform’s downtime. Olsen stated that an investigation into the causes of the security incident is ongoing. Despite the breach, Olsen assured customers their funds were safe, emphasizing that Lykke has strong capital reserves and a diversified business model. The exchange’s website currently displays a message indicating that the platform is undergoing maintenance due to security issues and will remain inactive until further notice.

Recent Trends in Crypto Security

Lykke’s breach follows another significant hack involving DMM Bitcoin, where $320 million was stolen on May 31. According to DefiLlama data, crypto thefts 2024 exceeded $582 million, surpassing the $433 million recorded in the previous year’s first half. Private key leakage has been identified as a major security issue contributing to these thefts.

Cyvers, a cybersecurity firm, reported that 85% of the $900 million stolen from exchanges, bridges, and DeFi protocols in the latter half of the previous year was due to private key leakage. Private keys function as access controls for crypto wallets, and their compromise can lead to significant financial losses. The DMM Bitcoin hack, the largest crypto theft this year, has also been attributed to private key leakage. 

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