Key Takeaways
- 2 wallets linked to the CoinStats exploit in June have transferred 311 ETH, worth about $959,000, to Tornado Cash.
- Reportedly, one wallet moved 211 ETH while another transferred 100 ETH to the crypto mixer
Blockchain security firm CertiK has reported that two wallets linked to the recent CoinStats exploit transferred 311 ETH, valued at approximately $959,000, to the cryptocurrency mixer Tornado Cash. The breach, which occurred on June 22, compromised 1,590 crypto wallets managed by CoinStats. In response, the company promptly suspended user activity and shut down its application to isolate the security incident.
CertiK’s report highlighted that one wallet moved 211 ETH while another transferred 100 ETH to Tornado Cash. The mixing service anonymizes transactions by combining identifiable funds with many others, making it a favored tool for laundering illicit gains.
On June 30, CoinStats announced it was optimizing its transaction database and transitioning to a new platform to enhance efficiency and reliability. Upgrades and audits were also underway to bolster the security of their systems. By July 3, CoinStats declared that its app had recovered full functionality. However, the investigation into the breach is still ongoing, with the firm committed to ensuring its new infrastructure is robust and secure. CoinStats also promised to share additional information, including victim support measures, soon.
CoinStats CEO Narek Gevorgyan provided further details on the breach, revealing that their AWS infrastructure was hacked due to a socially engineered attack. “Our AWS infrastructure was hacked, with strong evidence suggesting it was done through one of our employees who was socially engineered into downloading malicious software onto his work computer,” Gevorgyan said. He expressed empathy for those who lost their funds in the attack and highlighted that they would support the victims, having already discussed their options.
Community members reported significant losses, with one wallet allegedly losing almost $9 million in Maker (MKR). The breach was attributed to a CoinStats employee who had been tricked into downloading malicious software onto their work computer, allowing attackers to infiltrate CoinStats’ AWS infrastructure and gain unauthorized access to users’ wallets. Social engineering, a common tactic among hackers, involves manipulating or deceiving individuals to gain control over their computer systems.
Crypto exploits are becoming increasingly common in the Web3 space. Per a PeckShield report, $574 million worth of digital assets were lost across 30 individual crypto hacks in May 2024, representing a 666% increase from April. Hackers have long leveraged crypto mixers like Tornado Cash for their anonymity.
Mixers use an algorithmic technique to disguise who each of the coins belongs to, where they came from and who they’ll be withdrawn by. Similar to the case of CoinStats, earlier this year, the hacker behind the $25 million breach at Kronos Research transferred another $2.6 million worth of Ether to Tornado Cash.
