Exmo, a cryptocurrency exchange headquartered in the United Kingdom, has suffered a major security breach causing the platform to freeze all withdrawals.
According to a Dec. 21 security notice, Exmo detected suspicious withdrawal activity on Monday, with large amounts of major coins like Bitcoin (BTC) leaving the platform’s hot wallets.
Maria Stankevich, head of business development at crypto exchange Exmo, told Cointelegraph that the incident is “nothing very serious,” as the affected hot wallets comprise 5% of the total assets held by the exchange. “Let us stress that all the assets in the cold wallets are safe,” the announcement reads.
According to the announcement, other affected cryptocurrencies included Ether (ETH), XRP, Tether (USDT), Zcash (ZEC), and Ethereum Classic (ETC). The exchange mentioned correspondent crypto wallets that were likely to be involved in the hack, asking global exchanges to block the associated wallets.
Stankevich noted that the exchange has not yet calculated the amount of losses, claiming that Exmo is now focused on tracking movement of withdrawn funds.
Exmo launched a security investigation and also reported the case to the London police. The company asked users to not deposit any funds to Exmo wallets until the issue is resolved. “We want to assure you that if any user fund is affected by this incident, it will be covered completely by Exmo,” the company said.
Earlier in December, Exmo received a temporary registration from the U.K.’s Financial Conduct Authority allowing it to continue trading for an extended period until July 9, 2021
“The founder holds the private keys to most of the platform’s cold wallets. Since the exchange currently can not process all the withdrawals, it has decided to suspend withdrawals.” https://t.co/RfSp1BbuRI
New data from Glassnode reveals that Bitcoin (BTC) withdrawals from crypto exchanges have hit a 17-month high of 2,288.125.
The on-chain metrics platform added that the previous high was witnessed on 26 November 2020.Per the analysis:
“Number of Bitcoin exchange withdrawals (1d MA) just reached a 17-month high of 2,288.125. A previous 17-month high of 2,265.875 was observed on 26 November 2020.”
The surge in these BTC withdrawals could be attributed to the fact that investors are cashing in their profits after the price of the king of crypto hit a new all-time high of more than $19,800 on Nov 30.
The digital asset pushed past $19,780 on certain exchanges and even hit $19,844 as it approached the crucial $20,000 level. This price rally is being witnessed because institutional investors, such as Stone Ridge Asset Management, MicroStrategy, Square, and Grayscale, are pouring in huge investments.
For instance, Square bought 4,709 Bitcoins for $50 million in October based on its inclination towards cryptocurrencies being instruments of economic empowerment, which provide an avenue to participate in the global monetary system.
The record-breaking BTC withdrawals could be linked to holding in cold storage wallets as investors’ confidence in this digital asset continues to grow by the day.
For instance, on-chain analytics provider Santiment disclosed in mid-November that Bitcoin whales still had confidence in the leading cryptocurrency because crypto wallets holding at least 10,000 BTC had reached a record high of 11.
The high BTC withdrawals from exchanges come at a time when leading Asian crypto exchange OKEx experienced a Bitcoin exodus after it resumed withdrawal services on Nov 26. Users had been subjected to weeks of uncertainty about the fate of their locked-up funds after one of its private key holders decided to cooperate with a public security firm concerning an ongoing investigation.
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After weeks of uncertainty for OKEx users about the fate of their locked-up funds, the leading Asian crypto exchange finally reopened withdrawal services at 8:00 am UTC on Nov 26. Less than 15 minutes after services resumed, crypto traders moved 2,822 Bitcoin (BTC) off the exchange, according to on-chain data provider CryptoQuant.
Large single-block outflow recorded
CryptoQuant reported that this BTC exodus was the largest single-block outflow to be witnessed in recent times since May 2019. The on-chain data provider tweeted:
“The first OKEx outflow after the withdrawal opening hit 2,822 BTC by the block time frame. It’s the year-high in the block time frame.”
The much-anticipated reopening announcement was revealed on Nov 19. It was noted that users could get “unrestricted withdrawal.” The crypto exchange also stated it would launch a loyalty reward campaign to show gratitude to its community members for the inconveniences caused by the withdrawal suspension.
Withdrawal restriction stirred mild selling panic
After OKEx brought to the public eye the suspension of all cryptocurrency withdrawals in mid-October, a mild selling panic was triggered in the crypto markets. For instance, Bitcoin and OKB prices plunged by 3% and 15%, respectively.
This decision was reached following one of its private key holders cooperation with a public security firm in regard to an ongoing “investigation.”
Ki Young Ju, the CryptoQuant CEO, also delved into the huge Bitcoin outflow issue and stated:
“Some whales are trying to leave OKEx, they might change their BTC to another coin for various reasons like faster transactions (change it to XRP for example).”
He added that 83% of the total sum was transferred to non-exchange wallets like custody, signaling a bullish gesture in the long-term. Serving many Chinese retail investors as one of the three largest Chinese crypto exchanges along with Huobi and Binance, OKEx has maintained its innocence in any wrongdoing.
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