ALEX Protocol Attacker Moves Stolen Funds to Thousands of On-chain Addresses

UTC by Steve Muchoki · 3 min read
ALEX Protocol Attacker Moves Stolen Funds to Thousands of On-chain Addresses
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ALEX Lab was attacked last month through a private key compromise leading to a loss of about $4.3 million.

Fast-growing Bitcoin (BTC)-based layer two (L2) protocol bridge ALEX Lab (ALEX), has issued a security update following its recent breach that resulted in a $4.3 million loss. According to the announcement on the X platform, the Alex protocol attacker has so far managed more than 9,700 on-chain transactions as of Monday.

The ALEX protocol attacker created more than 4,700 unique addresses in the past seven days to enable a stealthy transfer of the stolen funds.

“The number of traceable transactions started to grow exponentially from 300 to 9600+ and this has been accelerating without sign of pause,” the company noted.

According to on-chain data analysis, the ALEX protocol attacker has been transferring small amounts of Stacks (STX) tokens to thousands of new addresses, which are later transferred to centralized exchanges (CEX).

However, the Alex protocol’s team indicated that the majority of the CEXs have frozen the stolen funds, thus preventing the attacker from gaining access. Nevertheless, the attacker is likely to use different crypto mixers available in the market to evade being identified, despite the Alex protocol team highlighting that the hacker is already doxxed.

As of this report, the attacker’s CEX balance was about 8,373,587 STX tokens. Additionally, the ALEX Lab attacker’s on-chain balance was about 5,560,332 STX tokens, which is calculated based on wallet balances above 100 STX units.

ALEX Protocol Attack and Market Outlook

In a bid to find an amicable resolution, the ALEX Lab team has offered the attacker a bounty reward of 10 percent, but the offer has since expired. Furthermore, the Alex exploiter is determined to liquidate as much stolen funds as possible through sophisticated manipulations.

The ALEX protocol on the other hand is fighting to reimburse all affected individuals that impacted certain liquidity pools.

Moreover, the protocol has notable financial backing from reputable Web3 investors such as Gemini, Tribe Capital, GSR Ventures, and White Star Capital. In early 2021, ALEX Protocol raised $5.8 million to expand its developers and user experience team.

Following the announcement, the ALEX token has dropped more than 44 percent in the past seven days to trade around $0.09922 at the time of this report. The small-cap altcoin has a fully diluted valuation of around $99 million and a daily average traded volume of about $3.2 million.

On the other hand, the Stacks (STX) price dropped over 5 percent in the last 24 hours to trade around $1.80 at the time of this reporting.

Unless the ALEX protocol attacker is held accountable soon, the underlying value of both tokens will continue in a market correction.

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