Axie Infinity co-founder’s $9.7M Ethereum hack raises security concerns

In this post:

  • Jeff “Jihoz” Zirlin, co-founder of Axie Infinity, lost $9.7 million in Ethereum due to a hack of two personal wallets.
  • Blockchain security firm PeckShield first reported the theft involving 3,248 ETH being laundered through Tornado Cash.
  • The Ronin Network clarified that its bridge’s security was not compromised, suggesting the hack was due to wallet vulnerabilities.

In a significant security breach, Jeff “Jihoz” Zirlin, a co-founder of the popular blockchain game Axie Infinity and the Ronin Network, has reportedly lost approximately $9.7 million in Ethereum (ETH) due to a hack of two of his crypto wallets. The incident, which involved the theft of 3,248 ETH, was first brought to public attention by blockchain security firm PeckShield on February 23. The stolen funds were subsequently laundered through Tornado Cash, a cryptocurrency mixing service known for obscuring the origins of digital assets.

The breach was initially suspected to involve the Ronin Bridge, a key infrastructure piece for transferring assets between Ethereum and the Ronin sidechain. However, Aleksander Larsen, another co-founder of Ronin Network, clarified that the bridge’s security systems were intact and suggested that the compromise was due to a wallet hack. This was later confirmed by Zirlin, who emphasized that the attack did not exploit any vulnerabilities within the Ronin chain or the operations of Sky Mavis, the parent company behind Axie Infinity.

Axie Infinity reassures on post-hack security measures

Following the incident, an investigation by PeckShield revealed that the hacker managed to divide the stolen ETH among three different wallets before funneling the assets through Tornado Cash. This method of laundering the funds complicates the process of tracking and potentially recovering the stolen assets due to the anonymizing features of the mixer service. Using such services by malicious actors poses significant challenges for blockchain security and recovering illicitly obtained assets.

In response to the breach, Zirlin reassured the community and stakeholders of the stringent security measures for all chain-related activities within the Axie Infinity ecosystem. The incident has highlighted the ongoing challenges individuals and organizations face in securing digital assets against unauthorized access and theft. The Ronin Bridge, previously audited and equipped with mechanisms to pause in the event of unusually large withdrawals, was not compromised, reinforcing the notion that the security of blockchain infrastructure can be robust. Yet, individual wallet security remains a critical vulnerability.

Broader implications and industry response

The theft from Zirlin’s wallets is not an isolated incident in the cryptocurrency space. It follows a pattern of high-profile hacks and security breaches plaguing the industry. For instance, on January 31, Chris Larsen, a co-founder of Ripple, experienced a hack in which $112 million worth of XRP was stolen from his wallet. Unlike the Zirlin incident, the hacker in Larsen’s case did not use mixer services, allowing Binance to freeze approximately $4.2 million of the stolen funds.

These incidents underscore the importance of advanced security measures for individual wallet holders and the broader cryptocurrency ecosystem. They also highlight the role of cryptocurrency exchanges and blockchain analytics firms in identifying and mitigating the impact of such breaches. The community’s response, including efforts by entities like Binance to block access to stolen funds, demonstrates the potential for collaborative action in addressing security challenges.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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