On September 24, a significant breach rocked Huobi Global’s HTX exchange, causing a staggering loss of $7.9 million in digital assets. The startling revelation of this security breach came courtesy of blockchain analytics platform Cyvers, sending ripples of alarm throughout the cryptocurrency community.
What distinguishes this incident is Huobi’s bold claim of having exposed the identity of the hacker and an unconventional proposal. In a message originating from a recognized Huobi hot wallet, written in Chinese and directed straight to the perpetrator, the exchange offered an unexpected “white-hat bonus” incentive for the return of the majority of the pilfered funds.
Huobi Global’s Reaction to the Cryptocurrency Theft
The message boldly asserted that Huobi Global had successfully unmasked the assailant and proposed an unusual deal. The exchange extended an offer to the hacker, suggesting they keep 5% of the stolen funds as a “white-hat bonus” in exchange for returning the remaining 95%.
At 10:00 a.m. UTC on September 24, the suspected Huobi hot wallet executed a transfer, dispatching 4,999 Ether, approximately equivalent to $7.9 million, to an address devoid of any prior transaction history. This transfer set in motion a sequence of events that ultimately led to the exchange’s unique proposal regarding the white-hat bonus.
On Monday, Huobi Global’s investor, Justin Sun, publicly acknowledged the hack. He disclosed, “HTX @HTX_Global has suffered a loss of 5,000 #Eth (USD 8 million) due to a hacker attack.” Notably, Sun reassured users that their funds remained secure, and the exchange had promptly resolved all associated issues.
Huobi, a renowned exchange with a decade-long history, recently underwent a rebranding, emerging as HTX. This rebranding marked a fusion of Huobi’s heritage, the TRON token, and the fundamental principles of a cryptocurrency exchange. Beyond this rebranding, HTX adjusted its approach to listing assets, placing a strong emphasis on community involvement, and enabling users to participate in the decision-making process regarding asset listings.
Rebranding and Regulatory Challenges
Troubling reports concerning Huobi began circulating on August 4, with claims suggesting that the exchange’s representatives had been detained in China, purportedly due to their ties to gambling platforms. Simultaneously, the exchange’s total value locked (TVL) plummeted by $500 million, dropping from over $3 billion to $2.5 billion.
In its commitment to regulatory compliance, Huobi secured regulatory approval from the Financial Services Commission (FSC) for the British Virgin Islands last year. This authorization was granted to its local subsidiary, Brtuomi Worldwide Limited (BWL), enabling the provision of institutional-grade cryptocurrency derivative products in the region.
In May, the exchange encountered regulatory intervention in Malaysia by the Securities Commission Malaysia (SCM), leading to the shutdown of its operations due to inadequate registration as a local cryptocurrency operator. This legal issue also resulted in the blocking of Huobi’s website and mobile applications in the country.