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Bankrupt Crypto Firm Voyager Faces Suspected Cyber Attack During Withdrawal Period

In a recent report by Bloomberg on August 1, it was suggested that the troubled crypto firm, Voyager, may have fallen victim to a cyber attack while allowing customers to withdraw their assets during bankruptcy proceedings. The company’s lawyer, Darren Azman, revealed that customers were given a 30-day window to withdraw their funds, during which $490 million, representing 80% of possible withdrawals, were taken out.

While Azman did not directly link the withdrawals to potential attackers, he acknowledged that Voyager customers became targets of scams aimed at infiltrating their wallets. Scammers set up fake websites, luring customers with promises of increased payouts by connecting their non-Voyager crypto wallets to a new account. Once the customer creates the account, the attacker can empty the non-Voyager wallets.

Despite the potential severity of such attacks, Azman stated that only a few customers fell victim to the scam. However, U.S. Bankruptcy Judge Michael Wiles expressed his disapproval of the incident, calling it “disgraceful,” and expressing sympathy for the creditors affected.

The suspected security breach has been reported to law enforcement agencies, and bankruptcy officials responsible for the company’s closure are conducting an investigation.

The withdrawal period and date of the hack were not specified in Bloomberg’s report. Still, it is known that Voyager reopened withdrawals around June 23. The firm had initially suspended withdrawals and filed for bankruptcy in mid-2022 due to a broader crypto lending liquidity crisis that affected the sector during that summer. The company’s bankruptcy process was further delayed as it failed to reach buyout agreements with Binance.US and FTX.US. However, it managed to secure a $445 million loan and redeemed other assets from FTX in early 2023.

The situation has raised concerns about the security of crypto firms and the need for robust measures to protect customers’ assets from potential cyber-attacks. As the investigation unfolds, the crypto community will be keenly watching to see how the issue is resolved and what measures will be put in place to prevent such incidents in the future.

 

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