By
Tolu Ajiboye
May 10th, 2024
Deribit’s hot wallet compromise is the latest hack to raise concerns about the security of crypto exchanges.
Netherlands-based exchange Deribit has announced the hack of its hot wallet. Deribit announced the compromise of its wallet and the loss of $28 million via Twitter. According to the announcement, the hack occurred just before midnight on November 1 and is limited to its BTC, ETH, and USDC hot wallets.
To allay client fear, the exchange noted:
“It’s company procedure to keep 99% of our user funds in cold storage to limit the impact of these type of events.”
Likewise, it noted that the stolen funds will be covered by company reserves and will not affect any clients.
While the exchange noted that it was an isolated event, it nevertheless halted withdrawals temporarily to allow it to carry out system security checks. Deribit announced it will reopen withdrawals once it is sure the system is safe.
Deribit before the Hack
Founded in 2016, Deribit specializes in futures and options trading. Data by Coinglass suggests that Deribit remains a leader in the market, controlling a huge ton of the trades. Specifically, the exchange controls 89.76% of the total Bitcoin options interest. CME comes a distant second with 6.87% Okex and FTX make up the rest of the top four.
For the Ethereum options market, Deribit also holds a 96.64% share of the market. Deribit processes thousands of orders per second. While it allows trading 24/7, the exchange does not allow self-trading. Deribit raised $40 million in its latest funding round on September 26, 2022, with support from 10T Fund, Akuna Capital, and QCP Capital.
Rising Number of Hacks and Security Concerns
Deribit’s hot wallet compromise is the latest hack to raise concerns about the security of crypto exchanges. Just recently, Binance lost $570 million to a hack of its cross-chain bridge. Market maker, Wintermute, also lost $162 million in September, while Nomad Bridge lost $190 million one month earlier.
Also in 2022, Wormhole lost $325 million to a hack. The Ronin Network suffered the greatest breach of all, losing $625 million worth of Ethereum and the USDC. With more and more hacks occurring, the vulnerability of the crypto industry continues to be exposed.