Atomic Wallet breached, loses $35 million

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  • The infamous Lazarus group bypassed their blockchain security and made off with $35 million worth of cryptocurrencies.
  • Roland Sade, Atomic Wallet’s Chief marketing officer, has reassured users that they will regain their lost digital assets.
  • One of its features is that users can recover their accounts with a 12-word backup seed phase.

Many might assume that crypto volatility is the primary plague that hinders the global adoption of the industry. Unfortunately, crypto hacks and scams have proven more effective in dealing with a massive blow to the crypto market. 2022 proves that current blockchain security measures require intense scrutiny to ensure some form of progress for the ecosystem. Some exchanges have stepped forward into implementing top-notch measures o ensure digital asset protection. Unfortunately, we cannot say the same for Atomic Wallet, a decentralized crypto wallet that recently became a victim of a crypto hack on 3rd June.

Who are Atomic Wallet

In 2017, at the height of the crypto wave globally, it became clear that traders required safer options to store, collect and interact with their digital assets. Konstantin Gladych founded Atomic Swap at the time to usher in a new age of decentralized crypto wallets that offered users a safe option for trading. Gladych would later change its name to Atomic Wallet to emphasize its intricate desire for digital assets.

Back in 2017, the notion of digital asset protection was strictly a requirement, given that its value had skyrocketed, beating most expectations.

Decentralized and Centralized wallets

For those unaware, a decentralized crypto wallet is a platform that gives users complete control over their digital assets.

Its counterpart, the centralized crypto wallet, had gained much popularity then, but it still offered a singular flaw. Since Centralized crypto wallets require third-party intermediaries, their blockchain security provides a single point of failure. As a result, numerous crypto hacks occurred, resulting in the loss of millions.

Also, Read 2023: A leap forward in blockchain security compared to 2022.

Atomic-Wallet
Atomic Wallet is renowned for its sophistication as a decentralized crypto wallet and its robust blockchain security.[Photo/Medium]
Decentralized Crypto wallets, on the other hand, offer complete digital asset protection from any third party. The user or owner of the wallet has complete control over their private keys, which are an integral part of accessing their digital assets.

Atomic Wallet offers non-custodial storage of all crypto assets. It provides an easy-to-use interface that emphasizes users’ privacy and anonymity. Its transactions are anonymous, adding a layer to its blockchain security that prevents crypto hacks from targeting specific individuals.

Regarding blockchain security, the decentralized Crypto wallet has gained some form of recognition from its peers. One of its features is that users can recover their accounts with a 12-word backup seed phase. This feature aids new Crypto readers who have lost their private keys. Furthermore, it randomly generates the key, and users do not worry about crypto hacks.

Unfortunately, even Atomic Wallet could not remain outside the radar of crypto hackers.

Lazarus breached Atomic Wallet.

On 3rd June 2023, the decentralized Crypto wallets became among the few victims of crypto hacks this year. According to Elliptic, the infamous Lazarus group bypassed their blockchain security and made off with $35 million worth of cryptocurrencies.

Unfortunately, Atomic Wallet had previously received a blockchain security audit that cautioned that a few of its features might be vulnerable to breaches. The Least Authority had stated that the way the decentralized Crypto wallet implements cryptography did not adhere to best practices.

The lack of proper project documentation and the incorrect use of an Electron, a framework for desktop applications, hinted at the possibility of an undetected vulnerability. 

Also, Read Trust Wallet: A crypto wallet that guarantees security and flexibility.

Dmytri Budorin, CEO of Hacken, hypothesizes that the crypto hack occurred to the way Atomic Wallet generate recovery phrases for wallets. Throughout its years of operation, its system could not produce sufficient random sequences of the world, making it easier for hackers to brute force it.

Another possibility includes a supply chain attack on the decentralized crypto wallet manufacturer. Others speculate that some users unintentionally broadcast their private keys to its centralized server within its website.

Despite this, the breach of their famed digital asset protection mechanism is evident and has left a negative mark.

Crypto mixers promoting theft

After the crypto hack, Atomic Wallet confirms that the perpetrators moved the stolen funds into Blender.io, a crypto mixer. Unfortunately, this trend correlates with the habits of the Lazarus group. The US Treasury Department has stated that the existence of crypto mixers has heavily aided the North Korean hacking group and is not posing a nuisance to the entire ecosystem.

Roland Sade, Atomic Wallet’s Chief marketing officer, has reassured users that they will regain their lost digital assets. He added that this crypto hack had dealt a devastating blow to the firm’s reputation.

Since 2017 the decentralized crypto wallet has received recognition for its robust blockchain security features. This crypto hack serves as a significant blemish on their record. Gladych has not commented on the incident, but the damage is already done.

Also, Read The time is ripe to fast-track crypto regulation in Africa.

Fortunately, the decentralized Crypto wallet has ensured that the amount stolen only represents less than 1% of its monthly active users.

Conclusion

The crypto ecosystem is current;y in turmoil with pressure from every side. The 2023 crypt winter is steadily progressing, and the SEC has tightened their grip on regulation. The crypt hack on Atomic Wallet might not affect its current trading rate, but it has opened the doors for more scrutiny from the ecosystem. Digital asset protection is a non-negotiable factor that most exchanges have o adhere to. Failure to present loopholes within their blockchain security could lead to legal issues.

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Ken Mutuku
Ken Mutuku
I am an enthusiastic writer who believes that facts, knowledge and opinions can be expressed vividly with just a few words. I think that all forms of writing achieve this; hence I have a wide area of expertise and interest, such as cryptocurrency, psychology and the human mind.