DeFiance Capital founder loses $1.6 million in hot wallet hack

A hot wallet of “Arthur_0x,” the founder of major crypto investment firm DeFiance Capital, has been hacked, losing more than $1.6 million in non-fungible tokens (NFTs) and cryptocurrencies.

He asked people to blacklist the hacker’s wallet, and the crypto community showed him great support in helping him recover the stolen assets. Some on Twitter tried to determine how the hackers got in and where they gained access to the wallet.

NFT community member "Cirrus" even purchased two stolen Azuki NFTs and decided to return them to Arthur at cost. Cirrus told Cointelegraph today that he “discovered that they were hacked and decided to sell them to him at cost to help him out, rather than sell them for a profit like everyone else.”

Cirrus added it was "not the first time" it had happened to him. “I could easily sell them for a profit of 6-8 ETH, but it’s not right,” he said. His profile shows that he has been the victim of a rug pull three times before, which may well make him a victim of a rug pull. sympathized with.

A rug pull is when a cryptocurrency or NFT project shuts down suddenly and the value of its token or NFT plummets without prior warning. In most cases, rug pull is considered a scam.

In total, Arthur appears to be missing 78 different NFTs from 5 series, most of them Azukis. He also lost 68 WETH, 4349 stkDYDX and 1578 LOOKS tokens. The hackers began transferring assets around 12:30AM UTC, and quickly put all the NFTs up for sale on the OpenSea NFT marketplace. As of this writing, the hacker has 545 ETH in his wallet, worth approximately $1.6 million.

The hack highlights the importance of operational security when dealing with self-custody of crypto assets, as even industry executives can be targeted. In Arthur's case, baffled by what happened to him, he tweeted: "Hot wallets on phones really aren't secure enough."

Before I start trading NFTs more often, I am very careful and stick to only using hardware wallets on my PC.

The hot wallet on the mobile phone is really not safe enough

— Arthur⛩️ (@Arthur_0x) March 22, 2022

If Arthur had been using a hardware wallet, also known as a cold wallet, he might not have been subject to this attack. Unlike hot wallets, hardware wallets are not always connected to the internet. It also keeps personal private keys and seed phrases safe from intrusion. However, Arthur believes that the security breach occurred due to a transaction he made on-chain, which would also compromise the security of the hardware wallet.

NFT and crypto scams are always dangerous, so investors should take the safest precautions with their assets. There are even serial scammers who devise projects to take advantage of the NFT community, then run off to move on to the next scam. As Cirrus points out:

"It's a gold rush for hackers, and they're doing everything they can to come up with new ways to take advantage."

In light of the disappointment and anger over the hack, Arthur slammed the party that stole his assets, saying on Twitter: "All I can say to the hackers is you messed with the wrong guy."

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.