Crypto Exchange CoinEx Drained of $27M in Latest Fraud

UTC by Bhushan Akolkar · 3 min read
Crypto Exchange CoinEx Drained of $27M in Latest Fraud
Photo: Shutterstock

CoinEx has reassured all its customers that all the affected parties shall receive a refund of 100%. The exchange also said that it would release a detailed report soon.

On Tuesday, September 12, crypto exchange CoinEx witnessed a massive amount of outflows to an address with no prior history. On Tuesday, the exchange promptly detected “unusual withdrawals”, prompting an immediate response. Consequently, a dedicated task force was assembled to investigate the issue.

As per the estimate by blockchain security platform Cyvers Alerts, the total losses could be anywhere north of $27 million. Around 1:21 pm UTC, a recognized CoinEx hot wallet initiated a transfer of approximately 4,947 Ether (ETH), valued at $7.9 million at that moment, to an Ethereum account. This recipient account had no previous transaction history.

Following this initial transaction, the CoinEx hot wallet initiated significant transfers of various tokens to the same address. These transfers included approximately 408,741 Dai (DAI) stablecoin, 2.7 million Graph (GRT) tokens, 29,158 Uniswap (UNI) tokens, among others.

The outflow of tokens from the wallet raised suspicion and was deemed “suspicious” by blockchain security firm PeckShield. Julio Moreno, the Head of Research at CryptoQuant, also noted the “strange” behavior of the CoinEx wallet, pointing out that Ether reserves had essentially been depleted.

CoinEx has recently encountered a series of challenges in addition to the latest security incident. Additionally, the exchange is confronting legal action from a New York state attorney, who has alleged violations related to business registration.

Crypto  Exchange CoinEx Confirms the Attack, Reassures Users

In a detailed message on Twitter, CoinEx stated that the platform has experienced suspicious withdrawals. “[Our] Risk Control System detected anomalous withdrawals from several hot wallet addresses used to store CoinEx’s exchange assets,” the exchange said.

Additionally, the exchange has also appointed a special team to investigate what actually happened. The exchange stated that they would share a detailed report “as swiftly as possible”. Furthermore, CoinEx also reassured users that all the funds are safe. It noted:

“We assure all users: your assets are secure and untouched. Affected parties will receive 100% compensation for any loss due to this breach. For added security, deposit & withdrawal services are temporarily suspended and will resume after a thorough review.”

Furthermore, experts suggest that CoinEx needs to improve its security to avoid similar problems in the future. How CoinEx deals with this situation will affect its reputation and trustworthiness in the long run.

So, as CoinEx works on making its security stronger, it’s at a very important point. It needs to grow but also make sure it’s really secure. This is a big challenge because it has to keep its security tight and still keep the trust of its many users.

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