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In May 2021, Huobi, a leading cryptocurrency exchange, reported that its hot wallet was drained of $7.9 million in cryptocurrency. The exact cause of this theft has yet to be determined, though it appears to have been an inside job. Although Huobi said that customer funds were not affected, the company has yet to reimburse any customers for their loss.
Huobi has since released an official statement stating that it is working with all relevant law enforcement organizations to investigate the theft. No further details were provided, however, leaving many in the crypto community wondering how the theft occurred and why the funds were not better secured.
Huobi’s hot wallets are online wallets that store cryptocurrencies and are used to process transactions. They are different from cold wallets, which store cryptocurrencies offline and are used to store reserve funds. Because hot wallets are constantly connected to the internet, they are more easily susceptible to malicious actors who may try to steal funds.
Huobi has promised customers that it will make up for their losses, although it has yet to follow through or provide a timeline for reimbursement. This is likely due to the fact that the company is still investigating the cause of the theft and has yet to identify the responsible parties.
It is also possible that the hack was related to a recent software vulnerability that affected several crypto exchanges. The vulnerability allowed attackers to access and manipulate user funds without the user’s knowledge. It is unclear, however, if this was the case in the Huobi hack.
Huobi’s failure to promptly address the theft has caused concern and sparked criticism in the crypto community. This incident has put a spotlight on the security measures that exchanges use to protect user funds, and many traders are now looking for more secure alternatives.