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Stolen Ether from Poloniex Exchange Remains Unrecovered

May. 14, 2024.
1 min. read. Interactions

More than $50 million of Ether from the November 2023 Poloniex hack has been laundered through the Tornado Cash privacy protocol.

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Over half of the $100 million worth of Ether (ETH) linked to the infamous Poloniex hack from November 2023 has been siphoned via the privacy protocol Tornado Cash, according to recent reports.

On November 10, 2023, crypto exchange Poloniex experienced massive unauthorized outflows from its wallets. Subsequent investigations confirmed the loss of over $100 million worth of ETH due to a hack. Despite Poloniex identifying the hacker weeks later and offering a $10 million bounty, the stolen funds were never recovered. Blockchain security firm CertiK attributed the incident to a “private key compromise.” In response, Poloniex temporarily disabled the compromised wallet.

Six months later, it became evident that the hacker had no intention of returning the stolen funds. Blockchain investigation firm PeckShield discovered that more than half of the stolen Ether was transferred through Tornado Cash, a protocol used to anonymize assets. The hacker moved over 17,800 ETH from six different wallets into a single Tornado Cash address. At the time of transfer, the tokens were worth approximately $53.3 million.

Despite the significant setback, Poloniex resumed operations shortly after the incident, allowing investors to deposit and withdraw crypto. The exchange also appointed a “top-tier security auditing firm” to enhance the security of funds on Poloniex and prevent future hacks. At the time, Poloniex stated, “Currently, they are in the final stages of the security audit and verification processes for Poloniex. Upon completion of the audit, we will promptly resume deposit and withdrawal services on our platform.”

Poloniex owner Justin Sun, who acquired the exchange in 2019, promised to fully reimburse users affected by the breach. Sun assured that Poloniex “maintains a healthy financial position” and is seeking collaborations with other exchanges to recover the lost funds.

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