Mixin Network has suspended all deposits and withdrawals from its platform after a suspected hacker drained millions of dollars worth of tokens from the site in what is arguably the largest cryptocurrency exploit of 2023 so far.
Mixin Network Grapples With $200 Million Security Breach
Mixin Network was recently hit by a multi-million-dollar hack.
Mixin confirmed that a security breach on September 23 drained over $200 million worth of cryptocurrencies from its mainnet. This is equivalent to half of the net TVL of all Mixin-based protocols, according to recent data.
In its statement, the Mixin Network team revealed that hackers attacked its “cloud service provider”. An immediate freeze of all deposit and withdrawal services on Mixin Network followed the announcement. Transfers, however, will not be affected during this period.
Mixin is a Hong Kong-based decentralized cross-chain transfer protocol developed to make transfers of assets like Bitcoin, Ethereum, XRP, Litecoin, and Dogecoin, among others, cheaper and more efficient.
The team plans to restart withdrawals and deposits “after discussion and consensus among all nodes” and after “the vulnerabilities are confirmed and fixed.”
While explaining this incident during a public Mandarin livestream, Mixin founder Feng Xiaodong noted that “Bitcoin was “the core asset” stolen and that the team would compensate users “up to a maximum of 50%” for the stolen crypto assets. Feng said the remainder would be distributed to users as “tokenized liability claims” that Mixin would eventually repurchase “with its future profits.”
Soon after the news emerged, the Mixin Network’s native crypto XIN fell sharply. XIN is trading at $199.61 as of press time, down some 4.4%, according to CoinGecko data.
Many members of the crypto community were puzzled by the gargantuan $200 million hack on Mixin.
In a Monday post, the CEO of Bitcoin mining pool BTC.TOP, Zhuoer Jiang asserted that Bitcoin stored in the Mixin protocol “should have never been stolen in the first place.” Jiang observed that Mixin’s Bitcoin would normally have been “kept in cold storage” and remained unaffected by the attack on the cloud service provider that compromised Mixin’s hot wallets.
Moreover, advocates of decentralization slammed the network’s design, with a special focus on the team’s remark on the “database of Mixin Network’s cloud service provider” and the unexpected discontinuation of withdrawals, which triggered concerns that the network could be more centralized than what the team previously advertised. Others suggested the security breach was possibly the work of inside rug pullers.