ZB Exchange Loses Nearly $5M in Suspected Hack, Pauses Withdrawals

The self-titled “world’s most secure” exchange may be the third crypto company to suffer a multimillion-dollar exploit this week.

AccessTimeIconAug 4, 2022 at 12:24 p.m. UTC
Updated Aug 4, 2022 at 3:27 p.m. UTC

Elizabeth Napolitano is a news reporter at CoinDesk.

Crypto exchange ZB Exchange has paused user withdrawals, likely in response to a suspected hack that appears to have drained nearly $5 million in tokens from the firm’s hot wallet on Tuesday.

The multimillion-dollar loss is the latest in a series of security breaches to hit crypto companies this year and the third multimillion-dollar hack reported this week.

Blockchain security company PeckShield called attention to the likely exploit that seems to have drained $4.8 million in tether (USDT), polygon (MATIC), shiba inu (SHIB) and other digital currencies from the exchange’s hot wallet on Wednesday. Transaction records show that the tokens were later sold on several decentralized exchanges for ether (ETH).

ZB Exchange hasn't yet publicly responded to the hack and didn't immediately respond to a request for comment. The firm did announce it is pausing withdrawals, citing “temporary maintenance,” in a blog post on Tuesday.

Several of the exchange’s users took to Twitter to voice concerns about how they would access their funds amid the freeze on withdrawals and to criticize the exchange’s silence on the suspected security breach.

In recent months, a series of multimillion-dollar exploits has rattled investor confidence in cryptocurrency markets and prompted many investors to become increasingly cautious of where they store their assets.

In June, a North Korean government-backed group plundered $100 million in altcoins from the Horizon bridge, a cross-chain bridge that enables token transfers between the Harmony blockchain and other networks. Then, earlier this week, hackers drained more than $5 million in tokens, including Solana's SOL token and USD coin (USDC), from around 8,000 Solana software wallets.

Also this week, cross-chain bridge Nomad suffered an exploit that drained nearly $190 million worth of crypto. According to a recent report from blockchain security firm Chainalysis, $2 billion worth of crypto has been siphoned out of cross-chain bridges so far this year, which accounts for 69% of the crypto theft this year.

Cross-chain bridges are used to send tokens between blockchains and are a popular tool used by the crypto community.

ZB Exchange, which once billed itself as the “world’s most secure” crypto exchange, was founded in 2013 under the name CHBTC.co and has over $1 billion in daily transaction volume.

The exchange, which used to be based in China, suspended its operations when regulators there banned fundraising through initial coin offerings in 2017. The move came after the Chinese central bank voiced concerns about the then largely popular and mostly unregulated fundraising method’s use in several financial scams. Since then, the company has moved overseas, operating out of Hong Kong with offices in Australia and the U.S.

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Elizabeth Napolitano is a news reporter at CoinDesk.

CoinDesk - Unknown

Elizabeth Napolitano is a news reporter at CoinDesk.