Security Breach Drains $40 Million from Crypto Betting Platform Stake, Company Reassures Customer Funds’ Safety

Security Breach Drains $40 Million from Crypto Betting Platform Stake, Company Reassures Customer Funds’ Safety

Crypto News – Prominent cryptocurrency betting platform Stake has fallen victim to an apparent security breach, resulting in a loss of approximately $40 million, as confirmed by blockchain security experts today.

The renowned gambling company, which boasts backing from rapper Drake, encountered a series of unusual transactions on Monday morning, Eastern Time. Around $16 million in Ethereum, Tether, USD Coin, and DAI were mysteriously withdrawn from the platform, initially reported by Web3 security firm Cyvers on Twitter. In addition, another $25 million was siphoned off on the Binance Smart Chain and Polygon networks, according to the pseudonymous cryptocurrency investigator known as ZachXBT.

Blockchain security firm Peckshield raised suspicions, especially if the platform wasn’t undergoing maintenance. Stake later officially acknowledged that these wallet transfers were “unauthorized,” signifying a security breach where an unknown entity had accessed the company’s wallet and initiated the fund transfers.

The company promptly took to Twitter, stating, “Three hours ago, unauthorized transactions were made from Stake’s ETH/BSC hot wallets. We are actively investigating the situation and will restore the wallets as soon as they’re completely secured. We want to assure our users that their funds remain safe.” It’s worth noting that a “hot wallet” is a digital asset wallet connected to the internet, rendering it vulnerable to hacks and exploits.

Billionaire Ed Craven, the founder of Stake, emphasized on Twitter that the platform keeps only a small portion of its crypto reserves in hot wallets at any given moment precisely for situations like these. He expressed optimism that all affected wallets would be operational again shortly.

Cyvers shared an address on Twitter where the diverted crypto assets ended up. They also observed that the stablecoins withdrawn from Stake had been converted into Ethereum, the second-largest cryptocurrency by market capitalization.

Taylor Monahan, MetaMask’s Lead Product Manager and a recognized security expert, took to Twitter to comment on the situation, remarking that the hackers targeting Stake appeared to be methodical. She provided visual insights into the ongoing wallet transfers by the suspected hackers.

Stake, launched in 2017 by Australian billionaire Ed Craven, boasts celebrity endorsements, most notably from Drake. In 2022, the rapper signed an endorsement deal reportedly worth $100 million annually, according to the Financial Times.

The newspaper reported gross gaming revenues for Stake in the previous year, totaling $2.6 billion, citing company financial records, thereby solidifying Stake’s position as one of the world’s largest gambling companies.