Phemex Crypto Exchange Faces $70M Loss After Security Breach Linked to North Korean Hackers

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Singapore-based cryptocurrency exchange platform, Phemex lost over $70 million on Thursday due to the security failure. The occurrence has elicited concern across the crypto space, with strong indications pointing to North Korean hackers per usual.

The hack started by first compromising one of Phemex’s hot wallets, limping off with $30 million; worse was still to come. But it went on and worsened, and more tokens fell in the process, such as: $USDC, $USDT, $ETH, $LINK, $PEPE, $FET, and $AVAX. Cyvers and Lookonchain security firms reported the activities by observing that there were misleading transactions that pointed towards a breach.

Notable amounts stolen include 3.48 million USDC,841 ETH ($2.7 million),110,701 LINK ($2.69 million) and 142 billion PEPE ($2.12 million).

Phemex’s Response and Assurances

The hack led to withdrawal suspension at Phemex as a measure to mitigate the problem. CEO Federico Variola discussed the issue on X outlining it with a statement that the funds, having been taken from a hot wallet which the exchange is currently investigating, the cold wallets are nevertheless fully auditable at any given time given the platform’s proof-of-reserves.

“As for cold wallets, they are protected, and everyone can verify that,” Variola said. The exchange also said that trading services and other operations are on as planned.

Phemex came as one of the first platforms to disclose its proof-of-reserves and proof-of-solvency. In a statement, the exchange said it is willing to compensate the users. Right now, the company is working on the compensation plan, and more details will be out shortly.

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North Korean Connection

This hack has led to a focus on North Korean cybercrime communities that are active in crypto attacks. This attack looks like the earlier ones attributed to such groups, especially the notorious Lazarus group, further proving that these groups are determined to keep exploiting weaknesses in the cryptocurrency market to finance their unlawful activities.

Phemex has pledged to be as transparent as possible with users and the public in this space. It is requested that investors and the users of the specific platforms be careful, constantly check their wallets, and carry trading only through tested exchanges.