Hackers Steal $540 Million in Crypto From 'Axie Infinity' Game

[question everything]

A cryptocurrency startup that operates a popular online game called “Axie Infinity” said Tuesday that hackers stole more than $500 million worth of cryptocurrency. “Axie Infinity” publisher Sky Mavis Ltd. said on March 23, hackers infiltrated a part of its Ronin Network, which the game runs on. The infiltrators got access to accounts holding cryptocurrencies and drained 173,600 ether and 25.5 million of the stablecoin USDC.

“The breach happened due to social engineering, not technical flaw,” said Aleksander Larsen, operating chief and co-founder of Sky Mavis. While users are now unable to withdraw or deposit funds to Ronin Network, he said Sky Mavis is committed to ensuring that all of the drained funds are recovered or reimbursed. It was the second-largest crypto hack ever, according to analytics firm Elliptic. The assets were worth about $540 million on the date of the theft and are worth about $615 million now.

Sky Mavis shared a link that shows the stolen funds are still in the hacker’s wallet. The firm said it is working with the analytics firm Chainalysis to track the stolen funds. The news didn’t have a big impact on the price of ether, which was down 0.65% at $3,395.20 at 5 p.m. ET. “We are working directly with various government agencies to ensure the criminals get brought to justice,” Ronin said in the statement. “We are in the process of discussing with Axie Infinity/Sky Mavis stakeholders about how to best move forward and ensure no users’ funds are lost.”

The hack comes as a blow to the crypto industry as it moves into the mainstream with Wall Street buy-in, celebrity endorsers and high-profile Super Bowl ads. The federal government is still weighing further regulations of digital assets.

More..

https://www.wsj.com/articles/hackers-steal-540-million-in-crypto-from-axie-infinity-game-11648585535 (subscription)

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I have no idea what all this means but some DUers may find it interesting.

[msfiddlestix]

1. What I have never understood, is how "crypto currecy" (bitcoin et al) can produce real wealth

It's been explained to me. I'm just too dense to get it, apparently.

I don;t understand how it can be "stolen" from accounts.

I do understand how easily (or not) anything online can be hacked into. I understand how identity can be stolen. but I don't understand how pretend money can make someone wealthy in real life terms. It's a universe of pure fantasy/fakery to me.

[Celerity]

3. Crypto explained in 5 minutes

[msfiddlestix]

4. Well that was Easy to understand. So it isn't fake currency after all.

I understood Bitcoin to be just an endless "supply" of 0's and 1's and it's just like a sort of an investment game played every day to create wealth out of all those zeros and ones. Soon, enough wealth could be amassed to buy up private islands and rockets and planets. Something like the Peter Theil's of the world creating their own country via Sea steads, forming their own fake countries and minting their own cyber money a la bit coin etc.

But in this great you tube primer, I've been disabused of those notions, and it's a thing I might want to experiment with.

except I have to understand that is actually hack-able. oops.

[Celerity]

5. the blockchain is not hackable, it's the online wallets that can be vulnerable

I strongly advise offline (and redundant) encrypted, hardened flash drives like IronKey.

https://en.wikipedia.org/wiki/IronKey

[msfiddlestix]

6. so the wallet is kept on the flash drive. (?)

Say I decide to open an crypto currency account. that account is saved on my ironkey drive and where transactions are sourced. ?

I use flashdrives for various account receipts, zoom videos downloaded from dropbox photos etc.

Now I'm to imagine keeping my wallet there instead of in cyber space. Ok. check. so then when I want to make a transaction using cyber currency, I go to my wallet on my ironkey drive. ok. The amount of currency is done by purchasing via my checking account. I just make deposit transfers from checking to this account, and store it on my flashdrive.

years ago back when bitcoin had first appeared on my radar, my room mate at the time explained that purchasing bitcoin would somehow double, triple (and more) in value as more and more people made purchases. I couldn't wrap my mind around that. I mean as more and more zeros and ones were generated. that sort of seemed like fantasy island in terms of real wealth. maybe that's not how it actually works.

[Celerity]

7. here is a deeper dive into it all

Chapter 4. Keys, Addresses, Wallets

https://www.oreilly.com/library/view/mastering-bitcoin/9781491902639/ch04.html

Introduction

Ownership of bitcoin is established through digital keys, bitcoin addresses, and digital signatures. The digital keys are not actually stored in the network, but are instead created and stored by users in a file, or simple database, called a wallet. The digital keys in a user’s wallet are completely independent of the bitcoin protocol and can be generated and managed by the user’s wallet software without reference to the blockchain or access to the Internet. Keys enable many of the interesting properties of bitcoin, including de-centralized trust and control, ownership attestation, and the cryptographic-proof security model.

Every bitcoin transaction requires a valid signature to be included in the blockchain, which can only be generated with valid digital keys; therefore, anyone with a copy of those keys has control of the bitcoin in that account. Keys come in pairs consisting of a private (secret) key and a public key. Think of the public key as similar to a bank account number and the private key as similar to the secret PIN, or signature on a check that provides control over the account. These digital keys are very rarely seen by the users of bitcoin. For the most part, they are stored inside the wallet file and managed by the bitcoin wallet software.

In the payment portion of a bitcoin transaction, the recipient’s public key is represented by its digital fingerprint, called a bitcoin address, which is used in the same way as the beneficiary name on a check (i.e., “Pay to the order of”). In most cases, a bitcoin address is generated from and corresponds to a public key. However, not all bitcoin addresses represent public keys; they can also represent other beneficiaries such as scripts, as we will see later in this chapter. This way, bitcoin addresses abstract the recipient of funds, making transaction destinations flexible, similar to paper checks: a single payment instrument that can be used to pay into people’s accounts, pay into company accounts, pay for bills, or pay to cash. The bitcoin address is the only representation of the keys that users will routinely see, because this is the part they need to share with the world.

In this chapter we will introduce wallets, which contain cryptographic keys. We will look at how keys are generated, stored, and managed. We will review the various encoding formats used to represent private and public keys, addresses, and script addresses. Finally, we will look at special uses of keys: to sign messages, to prove ownership, and to create vanity addresses and paper wallets.

Public Key Cryptography and Cryptocurrency..................

snip

[msfiddlestix]

8. thanks so much Celerity.. I feel like i totally grasp the concept in a practical and useful level

almost elementary. Like I can confidently open an account and make a simple transaction almost easy as using paypal, venmo or my credit cards.

On the other hand, I can remember stumbling and bumbling with my paypal (mostly related to password issues which seems ridiculous and silly now) years ago when it first became a thing.

Thanks so much for info..

[Celerity]

9. YW and always do your due diligence before investing in anything (I am sure you do!).

[msfiddlestix]

10. ✔️

[dalton99a]

2. Kick

The decentralized nature of crypto platforms, added with the ofttimes inexperience of the developers of those platforms, leaves plenty of vulnerabilities inside the code for hackers to exploit. Since 2011, there have been 226 hacking incidents — not including the “Axie Infinity” hack — that have led to the theft of $12.1 billion, research firm Crystal Blockchain estimates.

In 2021, there were a record 75 incidents that resulted in $4.25 billion being stolen, according to the firm. The largest crypto hack was in August 2021, when a DeFi protocol called PolyNetwork lost assets worth $611 million at the time of the hack.

One of the highest-profile hacks was the 2016 break-in of Bitfinex, which resulted in a loss of about $70 million worth of bitcoin at the time. In February, FBI agents seized the majority of the stolen funds, which had surged to a value of about $3.6 billion, and charged a Manhattan couple with laundering the stolen funds.