Deribit, a crypto derivatives exchange based in Panama has suffered a loss of approximately $28 million in a hot wallet compromi

Deribit, a crypto derivatives exchange based in Panama has suffered a loss of approximately $28 million in a hot wallet compromise exploit. As a result of the exploit, Deribit has halted all withdrawls from the protocol. [See, e.g. Partz, H. Deribit crypto exchange halts withdrawals amid $28M hot wallet hack. (Accessed November 2, 2022)].

In addition to the halting of regular client withdrawals, Deribit has likewise halted withdrawals by third party custodians Copper Clearloop and Cobo while it continues its ongoing security checks. The halts will continue until the point in time Deribit becomes convinced that the protocol is fully safe to open. [See, e.g. Akilligundem. Crypto Exchange Deribit Loses $28M in Hot Wallet Hack. (Accessed November 2, 2022)].

A company spokesperson for Deribit stated that since the company’s founding in 2016, this is the first attack experience by the protocol wherein it incurred a loss. [See, e.g. Partz, supra].

On this date, November 2, 2022, Deribit took to Twitter to announce this exploit. In said announcement, Deribit advised that all of it’s client’s funds are now safe and that the loss will be covered by reserve funds held by the company. [See, e.g. Subhasish. Largest Bitcoin Options Exchange Deribit Suffers a Hack; Loses $28M. (Accessed November 2, 2022)].

Deribit went on to advise that in addition to holding client funds in it’s cold storage wallets as well as any Fireblocks wallet addresses as a matter of company policy, goes a long way in the limitation of the effects of exploits such as this. [For those unaware, Fireblocks is a third party service helping institutional investors with settlement, transfers and crypto custody matters.] [See, e.g. Wan, S. Hackers attack Deribit hot wallets, steal $28M in crypto. (Accessed November 2, 2022)].

The company has requested that all deposits be held off until it is all clear and that any funds already in transit to the exchange will be processed and credited to the appropriate account following the required number of confirmations. [See, e.g. Partz, supra].

As of 08:00 UTC, Deribit claims to have isolated the attack and the developers claim to have control over the exploit. This attack suffered by Deribit affected the company’s BTC, ETH, and USDC hot wallets. [See, e.g. Wan, supra].

Deribit’s insurance fund will remain unaffected by the loss as the company has noted it will pay any loss for the fund in addition to covering all other losses. A statement by Deribit has noted that: “Deribit remains in a financially sound position and ongoing operations will not be impacted” [Partz, supra].

Despite experiencing ‘critical error on this website’ trouble with it’s ‘Deribits Insights’ data hub, its trading website apparently is intact. Deribits has claimed that any website problem being experienced is not in any way associated with the hack. [See, e.g. Partz, supra].