Earlier this week, cryptocurrency exchange HTX, formerly known as Huobi, experienced a significant security breach.
Around 5,000 Ether (ETH), valued at $7.9 million, was stolen by a hacker who compromised the exchange’s hot wallet, making off with the assets in a single sweep.
In response to the breach, Tron founder and HTX advisor Justin Sun reassured users that their assets would be safe and the exchange would cover the losses.
However, HTX took a unique approach by leaving an on-chain message for the hacker. They offered a 5% white-hat bounty and gave the hacker seven days to return the funds. Failure to comply would result in legal action, as the hacker’s identity had been uncovered.
This incident adds to the growing list of centralized platforms that have fallen victim to security breaches this year, albeit for a smaller amount. It underscores a long-standing principle in the crypto community: “Not your keys, not your coins.”
Brandon Brown, CEO and co-founder of FairSide, a personal wallet protection tool, stressed the importance of self-custody solutions.
These methods involve users holding and directly controlling their private keys and assets. Such practices reduce reliance on third-party platforms and mitigate the risks associated with single points of failure.
While centralized exchanges (CEXs) play vital roles in the crypto ecosystem by providing liquidity and user-friendly interfaces, they are attractive targets for malicious actors due to the substantial funds they hold.
Zak Taher, CEO of MultiBank, a financial broker specializing in trading tools and infrastructure, echoed Brown’s sentiments.
He emphasized that the HTX incident underscores the need for robust security protocols and internal policies within centralized exchanges.
Louis Bellet, CEO at Yellow Network, a layer-3 decentralized broker platform, highlighted a central vulnerability point in CEXs managing private keys.
Multiple personnel often have access to these keys, amplifying the risks. In contrast, decentralized protocols can isolate the impact of such security breaches.
Fraser Edwards, CEO at cheqd, a permissionless data network, expressed concern about the growing number of hack incidents and their impact on crypto’s reputation.