Crypto.com now says someone tried to drain $34m from hundreds of accounts

Won't reveal net loss, says it stopped some withdrawals and has reimbursed those who had funds taken

Crypto.com on Thursday said in a roundabout way that an unidentified person stole or attempted to steal as much as $34m in cryptocurrency from customer accounts.

In an update on the cyberattack reported earlier this week, the Singapore-based firm said it "learned that a small number of users had unauthorized crypto withdrawals on their accounts."

That small number, the biz revealed, amounted to 483 Crypto.com customers.

Normally, such actions are attributed to some entity – an attacker, a threat actor, thief, malicious insider, hackers, miscreants, or such – even if that term is only a placeholder for the responsible party because attribution isn't certain. Crypto.com however made no mention of any person or persons known, suspected, or presumed to be behind the attack described in its incident report, as if the funds absconded on their own.

The amount taken through these unauthorized withdrawals turns out to have been more than twice initial estimates: $34m in US dollars or 4,836.26 ETH, 443.93 BTC and approximately US$66,200 in other currencies.

Yet Crypto.com insists, "No customers experienced a loss of funds." That's because the company claims it was able to prevent the completion of "the majority" of these unauthorized withdrawals – attempted thefts – "and in all other cases customers were fully reimbursed."

So as the biz describes it, some customers did lose funds for a time until Crypto.com stepped in and replaced the stolen assets. The company refused The Register's request to provide additional information, such as the actual amount spent to reimburse the subset of victims who had their funds nicked.

Despite Crypto.com's insistence that everyone has been made whole, there are still people claiming on social media that they have not been reimbursed, as well as folks claiming they still cannot access their accounts. However, the intersection of social media and cryptocurrency is so full of shills and sh*tposting that any such assertions should be viewed with the same skepticism that the poorly regulated crypto industry deserves.

Analysis of an attack

On Monday, January 17, 2022, according to Crypto.com, the company's "risk monitoring systems detected unauthorized activity on a small number of user accounts where transactions were being approved without the 2FA authentication control being inputted by the user."

The Register would also like to know more about this apparent 2FA bypass. It sounds like a rather serious vulnerability. But again, the company refused to comment beyond its public post.

In response to the attack, Crypto.com said it halted all withdrawals and restored affected accounts. The firm's security team also revoked all customer 2FA tokens and logged everyone out of its system, to force customers to re-login and re-configure their 2FA settings. The company said its withdrawal infrastructure was down for about 14 hours and was restored on January 18 at around 1746 UTC.

To further limit the possibility of unauthorized withdrawals – there must be some more concise word for that – Crypto.com said it has instituted a 24-hour delay between the time an approved withdrawal address is registered and the time it can first be used. In addition, the creation of a withdrawal address will send a notification message to the account holder, so unauthorized withdrawals can be caught ahead of time.

Company CEO and co-founder Kris Marszalek said that in addition to the publication of the incident report, "our team is proactively reaching out to regulators to discuss the incident and our response."

Crypto.com next month plans to launch an insurance program called Worldwide Account Protection Program (WAPP). Subject to terms and conditions, it will reimburse account holders up to $250,000 when "a third party gains unauthorized access to their account and withdraws funds without the user’s permission" – a rather wordy way of saying "theft."

Among the requirements are: enabling multi-factor authentication (MFA) for all transactions types where MFA is available; having an anti-phishing code active at least 21 days prior to any reported theft; no use of jailbroken devices; filing a police report and sending a copy to Crypto.com; and completing a questionnaire as part of the forensic investigation.

"While we are reminded of the existence of bad actors intent on committing fraud, this new Worldwide Account Protection Program, along with our new MFA infrastructure, gives our users unprecedented protection of their funds, and hopefully, peace of mind," said Marszalek.

Mistakes were made, by someone, somewhere, and something happened, and now all's well. ®