Axie Infinity is the latest in a string of crypto-related hacks.
You may recall that last summer, we asked “Is Axie Infinity the next Pokémon?“
The game quickly became the largest crypto game on the market. It relies on NFTs with digital monsters selling for over a thousand dollars. In July, it was worth $1.5 billion. As of today, the cryptocurrency AXS has a market cap just shy of $4 billion.
So it’s no surprise that hackers targeted the highly successful project. Although details are sketchy, Axie Infinity‘s Ronin Network reported on Tuesday that it lost close to $615 million in USDC and Ethereum. USDC is a stablecoin pegged to the US dollar.
The breach resulted in 25.5 million USDC and 173,600 Ethereum getting pilfered from the Ronin bridge. Since all transactions on the blockchain are publicly recorded, you can actually see the transaction on Etherscan.
“While the investigations are ongoing, at this point we are certain that this was an external breach. All evidence points to this attack being socially engineered, rather than a technical flaw,” the company said in a blog post.
This ranks as the single largest hack in decentralized finance (a.k.a. DeFi) history. Axie Infinity‘s creators say that they are “committed to ensuring that all of the drained funds are recovered or reimbursed.”
Undoubtedly, this is not the last that we will hear about this story or hacks within the crypto industry. Cryptocurrency proponents bill it as decentralized and secure, but we’re now talking about billions of dollars lost to hackers. Unlike a bank – which is FDIC insured, heavily regulated, and has an obvious stake in not losing customers’ money – some crypto projects seem about as secure as a swimmer with an open wound in a shark tank.
Long story short: guard your money. Many of these crypto projects deserve a lot more scrutiny than they are receiving, especially when we’re talking about billions of dollars invested.