Stablecoin

Cryptocurrency

Cryptocurrency exchange Kraken has revealed that a research team remains in possession of $3 million worth of digital assets it had appropriated in a recently discovered bug.
An anonymous self-proclaimed “security researcher” found a critical security bug and alerted the cryptocurrency exchange on June 9.
However, two accounts related to the security researcher have exploited the bug to withdraw over $3 million worth of digital assets, according to Nicholas Percoco, chief security officer of Kraken. 
Following the multimillion-dollar withdrawal, the security researcher is demanding a reward for the stolen funds, Percoco wrote in a June 19 X <a href="https://x.com/c7five/status/1803403632689189154" target="_blank" rel="noopener nofollow">post</a>:
<blockquote data-ct-non-breakable="true">
 “Instead, they demanded a call with their business development team (i.e. their sales reps) and have not agreed to return any funds until we provide a speculated $ amount that this bug could have caused if they had not disclosed it. This is not white-hat hacking, it is extortion!”
</blockquote>
The cryptocurrency was stolen directly from Kraken’s treasury. The exchange claims that no user funds were endangered.
Kraken will continue its bug bounty programs to assure the exchange’s security and is working with law enforcement to recover the stolen funds, a Kraken spokesperson told Cointelegraph:
<blockquote data-ct-non-breakable="true">
 “We’re disappointed by this experience and are now working with law enforcement agencies to retrieve the assets from these security researchers.”
</blockquote>
Related: <a href="https://cointelegraph.com/news/nomura-crypto-laser-digital-abu-dhabi-license">Nomura crypto arm Laser Digital bags Abu Dhabi license</a>
<h2 id="this-is-not-white-hat-hacking-kraken">This is not white-hat hacking: Kraken</h2>
One of the three Kraken accounts related to the exploit has previously completed Know Your Customer (KYC) verification to an individual claiming to be a security researcher, but his identity remains undisclosed.
The individual who discovered a bug has initially proven the flaw with a crypto transfer worth $4, which would have been sufficient to prove the bug and collect “sizable rewards” from Karken’s bounty program.
However, the individual disclosed the bug to two other accounts that fraudulently siphoned nearly $3 million from their Kraken accounts.
These actions are akin to extortion, not ethical hacker behavior, according to Kraken’s Percoco:
<blockquote data-ct-non-breakable="true">
 “In the essence of transparency, we are disclosing this bug to the industry today. We are being accused of being unreasonable and unprofessional for requesting that ‘white hat hackers’ return what they stole from us. Unbelievable.”
</blockquote><iframe width="100%" height="315" src="https://www.youtube.com/embed/kyNQ5YoFkWo" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen data-ct-non-breakable="true"></iframe>
<figcaption style="text-align: center;">
 $3 billion stolen in hacks — Why are crypto crimes surging? Source: <a href="https://www.youtube.com/watch?v=kyNQ5YoFkWo&amp;t=25s" target="_blank" rel="noopener nofollow">Cointelegraph</a><a href="https://www.youtube.com/@cointelegraph" target="_blank" rel="noopener nofollow"></a>
</figcaption>
Related: <a href="https://cointelegraph.com/news/stablecoin-transfer-volume-16x-increase-4-years">Stablecoin transfer volume increased 16x during past 4 years</a>
<h2 id="crypto-hacks-in-2024-could-outperform-2023">Crypto hacks in 2024 could outperform 2023</h2>
Crypto hackers and exploiters could be <a href="https://cointelegraph.com/news/crypto-hacks-2024-private-key-leaks">poised for a more successful year in 2024</a>, compared to 2023.
In the first quarter of 2024, hackers stole digital assets valued at $542.7 million, a 42% increase compared to the same period in 2023.&nbsp;In an interesting turn of events, private key leaks were the leading cause of the growing exploits, not smart contract-related exploits.
Hacked funds lost to smart contract vulnerabilities fell 92% to $179 million in 2023, down from a staggering $2.6 billion in 2022, according to Merkle Science’s “<a href="https://info.merklescience.com/hackhub-report-2024" target="_blank" rel="noopener nofollow">2024 Crypto HackHub Report</a>.”
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-06/d5606cb7-cb2c-45c4-998b-22a364e9b708.png" alt="" title="">
 <figcaption style="text-align: center;">
 Crypto total losses by vulnerabilities. Source: Merkle Science
 </figcaption>
</figure>
Over 55% of the hacked digital assets were lost to private key leaks during 2023.
The cryptocurrency industry suffered 785 reported hacks and exploits, resulting in nearly <a href="https://cointelegraph.com/news/crypto-hacks-19-billion-13-years">$19 billion lost over the past 13 years</a>.
Magazine: <a href="https://cointelegraph.com/magazine/roaring-kittys-shares-1b-gme-rally-btc-open-interest-soars-hodlers-digest-june-2-8/">Roaring Kitty’s GME shares hit $1B, BTC open interest soars, and other news: Hodler’s Digest, June 2–8</a>

Kraken says its being extorted following bug bounty report

Table of Contents

Cointelegraph

Other articles published on Jun 19, 2024

Oil Land Buyer LandBridge Targets Crypto Miners as New Revenue Stream

Bitcoin Price Drops to One Month Low Slipping Under 50-DMA, More BTC Downside Left?

MoonBag to Succeed like Pepe? Analysts Predict $1 Evaluation for MBAG Coins in 2025

CoinFactiva Analysts Explain: Potential Ethereum Crash Post-ETF Launch

National Australia Bank’s Venture Arm Backs Digital Asset Custodian, Zodia Custody, With Major In...

Spot Ethereum ETFs Race Heats Up With Double-Edged Filing From Hashdex

Join our free newsletter for daily crypto updates!