Mixin Wallet Dealing With $200m Cyberattack in Crypto Industry Cautionary Tale

By  Noah Washington October 2, 2023

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  • Mixin Kernel, a prominent decentralized wallet solution, suffered a devastating cyberattack, leading to the temporary suspension of withdrawals and deposits.
  • The cyberattack on Mixin Network highlights a broader trend of increasing vulnerability in the cryptocurrency industry, with cumulative losses exceeding at least $920 million in 2023
  • The incident highlights the ongoing battle for security in the crypto industry, emphasizing the need for better security

In a stark reminder of the persistent challenges surrounding security and trust in the cryptocurrency landscape, Mixin Kernel, a prominent decentralized wallet solution, recently fell victim to a devastating cyberattack. This security breach has prompted the platform to temporarily suspend withdrawals and deposits, leaving users concerned and the crypto industry on high alert.

Mixin Kernel's Cyber Nightmare

The year 2023 has seen a worrying spike in cyberattacks and hacking attempts on the growing cryptocurrency sector. These frequent malicious activities have raised doubts about the reliability and resilience of blockchain platforms and networks.

One such platform, Mixin Kernel, became the most recent victim of an attack. The company broke the news on X (aka Twitter), stating that the cloud database provider they relied on had been breached by hackers. This announcement sent tremors through the cryptocurrency world, as Mixin is a known player in the industry. The attack signifies a crucial turning point for Mixin, forcing the company to grapple with the fallout of the security failure and restore trust in its systems going forward.

The announcement by Mixin about the attack. Source: X

As a result of the cyberattack, Mixin Kernel took the necessary steps of temporarily suspending withdrawals and deposits on its network. This dramatic decision was made to protect user assets and curb potential fallout from the breach. However, amidst the crisis, the platform did offer some reassurances regarding unaffected transfer operations.

A Growing Trend in Cryptocurrency

The Mixin Network hack is not an isolated incident. In fact, it is emblematic of a broader trend that has been gripping the cryptocurrency industry throughout 2023. The cumulative losses inflicted by malicious actors have surpassed a staggering $920 million this year alone. This alarming figure serves as an alarming wake-up call, emphasizing the growing vulnerability of blockchain projects and networks to digital marauders.

Crypto hacks are growing - 2022 was the biggest so far in value. Source: Chainalysis

In the wake of this security breach, Mixin Kernel found itself grappling with a nightmarish scenario—approximately $200 million in liquid assets had vanished. In the face of this monumental crisis, Mixin Kernel moved swiftly, enlisting the aid of two industry heavyweights—SlowMist and Google—to assist in its comprehensive investigation of the cyberattack.

Undeterred, Mixin stated its plan to restart services after addressing vulnerabilities and achieving consensus among nodes. In a further display of commitment to its users, Mixin pledged to provide more detailed information regarding the lost assets. The objective remained the same—minimize losses and facilitate a recovery process if possible.

The Mixin Network hack was not isolated. On September 24, 2023, South Korean exchange Upbit also suffered a major incident. Upbit recently resumed Aptos APT deposits and withdrawals after halting services due to an issue with a fake APT token being incorrectly recognized as legitimate.

Specifically, a scam token called "ClaimAPTGift.com" was airdropped to 400,000 Aptos wallets. Due to a failure by Upbit to properly verify the source code, the exchange mistook the fake tokens for real APT. This allowed some users who sold the fake tokens to profit.

Aptos (APT) price over the past year. Source: CoinGecko

Upbit has since fixed the issue after completing a wallet inspection, resuming APT services on September 24th. However, there may still be delays in processing deposits and withdrawals as well as price fluctuations compared to other exchanges, as Upbit works to fully resolve the situation.

Lazarus Group Speculation

Speculation has also begun to brew regarding the possible involvement of the Lazarus Group, an infamous North Korean-backed hacking collective. The Lazarus Group, also known as Hidden Cobra, is a cybercrime and hacking group that is believed to be sponsored by the North Korean government. Since 2009, the group has carried out numerous cyber attacks, primarily aimed at financial gain. One of the Lazarus Group's main targets has been cryptocurrency exchanges.

In 2017, the group was linked to the massive WannaCry ransomware attack. In 2018, Lazarus hacked the South Korea-based exchange YouBit, resulting in the exchange filing for bankruptcy. Later that year, the group also hacked the Singapore-based exchange DragonEx, stealing over $7 million worth of various cryptocurrencies.

The group is adept at using phishing schemes, malware and social engineering tactics to gain access to exchange wallets and infrastructure. Once inside, they drain crypto funds and launder the money through various means. Their attacks rely on carefully crafted malware and evasion techniques to avoid detection. The Lazarus Group's repeated targeting of crypto exchanges demonstrates that they likely view them as lucrative sources of digital funds to steal and cash out for their own uses.

Protecting Crypto Enthusiasts

The incident underscores the importance of such protective measures to safeguard the interests of cryptocurrency enthusiasts and investors alike. Trust in blockchain projects and networks is paramount, and maintaining that trust requires constant vigilance.

As the crypto community rallies around Mixin Kernel in its time of need, the Mixin Network hack has implications that reach far beyond one platform. It serves as a cautionary tale for the entire industry, compelling stakeholders to reevaluate their security protocols and readiness to combat cyber threats.

In the end, the Mixin Network hack may be remembered not only for the $200 million in losses but as a catalyst for greater resilience and preparedness in crypto. As digital assets continue to go mainstream, it is critical that cybersecurity measures keep pace.

Unless the industry finds ways to better safeguard against threats, episodes of major theft and disruption will likely persist. Leaders in the space must make cybersecurity a top priority, adopting best practices around encryption, access controls, and resilience against attacks. Only then can the promise of cryptocurrency be fully realized without compromising stability and consumer trust.