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Kronos Research Halts Operations After Losing $26 Million In Security Breach

Kronos Research, a Taipei-based market maker, trading firm, and venture capital fund, witnessed the withdrawal of significant amounts of crypto assets due to a breach of its security system. 

Kronos Breach: Investigation Underway

On Sunday, November 19, Kronos Research disclosed – via a post on X (formerly Twitter) – a security incident that involved unauthorized access to its API keys. Consequently, the company lost a significant amount of crypto funds and has halted all trading operations in a bid to launch a full investigation into the incident.

A map of funds outflow by on-chain sleuth ZachXBT summed Kronos’ losses to over $25 million in Ether. In a follow-up post on X, the company also confirmed that the losses are about $26 million in crypto assets.

Kronos

In its initial announcement, Kronos revealed that the potential losses are not a significant portion of its equity. Meanwhile, the trading firm said in its latest update that all losses will be covered internally, and no partners will be affected.

Although Kronos has yet to provide an update on its resumption process, the company did say that it aims to resume trading as soon as possible.

This $26 million attack on Kronos Research represents the third most significant crypto theft in November 2023. Before this latest incident, data from blockchain security firm Certik revealed that about $173 million had been lost to crypto attacks in November, with Poloniex’s $113 million hack being the most notable yet.

How Did This Hack Affect WOO X?

Interestingly, Kronos is not the only one affected by this security incident, as WOO X is another cryptocurrency entity that has had to pause its operations momentarily. WOO X is an exchange on which Kronos functions as the market maker for its spot and perpetual futures markets.

In an address on the X platform, WOO X acknowledged Kronos’ security situation and announced a temporary pause on all trading to protect users’ positions from a lack of liquidity. The exchange, however, emphasized that all customer funds are safe.

As of this writing, WOO X has resumed trading in both the spot and perpetual futures markets. Meanwhile, the exchange claims that clients can now make withdrawals for all assets.

Nevertheless, the trading platform has faced some backlash from the online crypto community, with some people pointing to its unclear relationship with Kronos.

Kronos

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Lazarus Group Transfers $64M ETH From Harmony Bridge Hack

During the weekend, the notorious North Korean hacking gang Lazarus Group started transferring stolen money in the Harmony Bridge attack. Notably, the organization transferred over $63.5 million, or approximately 41,000 ETH. 

On January 16, blockchain detective ZachXBT published information about the transfer of a significant amount of Ethereum. The cryptocurrency assets which originated from Tornado Cash were transferred via Railgun. Railgun is a private smart contract platform that uses zero-knowledge proofs to hide financial transactions.

According to the analyst who followed the trail of more than 350 addresses, some 41,000 ETH worth about $63.5 million were sent through Railgun and deposited on three different exchanges.

Funds Frozen By Binance And Huobi

Binance’s CEO, CZ, tweeted that the exchange had previously uncovered suspicious money transfers from the Harmony One hackers when they attempted to launder money through Binance. As a result, the accounts were frozen by the exchange. 

The Group had been keeping its money in Tornado Cash, a service that helps keep people’s identities secret and is used by criminals to launder money in the crypto industry.

The experts followed the funds through more than three hundred addresses. They concluded that Railgun had spread around 41,000 ETH among multiple receivers before the cryptocurrencies were deposited at various exchanges. He did not name the exchanges, but he did say that the Lazarus Group routinely makes rapid withdrawals from such platforms.

Connections Between Lazarus And Harmony’s Attack

Lazarus is now quite skilled at hiding their movements from law enforcement agencies while transferring illegal cryptocurrencies. For example, they were suspected of being behind the attack on Harmony Bridge in June 2022. In-depth information about the attack was published by Elliptic, a blockchain analytics service, at the time it occurred.

Multiple large crypto heists, totaling over $2 billion, have been linked to the Lazarus Group. DeFi and cross-chain bridges became a new target in 2022, and the group was also suspected of being behind the $600 million Ronin Bridge attack.

According to a recent report by cybersecurity firm Kaspersky, another North Korean hacker group BlueNoroff has expanded its illegal activities by posing as venture capitalists looking to invest in cryptocurrency startups.

Kaspersky’s report shows the global attacks by BlueNoroff against cryptocurrency businesses were uncovered in January 2022 but slowed down until the fall.

Theft of cryptocurrency has become a profitable business for North Korean hackers. According to information about their operations, South Korean spying services estimate that over $1.2 billion in cryptocurrency has been stolen from the global community since 2017. In 2022, numerous companies, including FTX, were victims of cyberattacks.

At the time of writing, Bitcoin is trading around $20,800, up 21% in the last week. It is currently trading above its 50-day Simple Moving Average (SMA), which indicates that the price will remain bullish in the short term.

Featured image from Euronews, Chart from Tradingview.com.