Atomic Wallet Exploited For More Than $35M

Atomic Wallet, a cryptocurrency wallet service with 5 million users, is currently grappling with a significant security breach.

An unknown exploit has resulted in users losing over $35M of assets. However, the damage may very well exceed $50M, considering ongoing reports of stolen assets. The largest reported loss is $7.95M in USDT tokens drained from a single wallet.

On-chain investigator ZachXBT identified the exploit and was instrumental in recovering some lost funds; over $1M has been returned to one victim of the exploit. Details of the recovery process have not been disclosed as the exploit continues to pose a risk to Atomic Wallet’s users.

The Atomic Wallet token dropped more than 25% following the news of the hack.

The project’s response to the incident has been met with criticism.

Users took to Twitter to contest the company’s claim that the last exploit transaction occurred over 40 hours ago. Several users have reported losing Bitcoin and other assets after the timeframe provided by Atomic Wallet.

Taylor Monahan, the founder and CEO of MyCrypto, accused Atomic Wallet of negligence.

Monahan alleges that the wallet service ignored a security report from February 2022 that warned of critical vulnerabilities that could lead to substantial user losses.

Limited Recourse

In the face of this exploit, the question of user compensation remains uncertain. As per Atomic Wallet’s terms and conditions, the company is not obligated to compensate users for more than $50 in damages. This clause leaves many users with substantial losses and little hope of recovery from the company.

The DeFi sector has been hit by several major exploits in 2023, including a $200M exploit on lending protocol Euler Finance in March, and a $3.4M loss due to a faulty smart contract on SushiSwap.