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In a hot wallet breach, the founder of DeFiance Capital loses $1.6 million

“Arthur 0x,” the founder of large crypto investment business DeFiance Capital, had one of his hot wallets hacked, resulting in the theft of over $1.6 million in nonfungible tokens (NFTs) and crypto.

The crypto community has rallied to his aid, offering to help him recover the stolen items after he requested that the hacker’s wallet be blacklisted. Several people on Twitter have attempted to figure out how the attack happened and how the hacker got access to the hacker’s wallets.

“Cirrus,” a member of the NFT community, went so far as to purchase two of the stolen Azuki NFTs and decide to return them to Arthur at no cost.

Cirrus went on to say that this isn’t the first time anything like this has happened to him. “I could easily go sell them for 6-8 ETH profit,” he explained, “but it’s just not ethical.” His profile says he’s been a victim of rug pulls three times, so his sympathy for his fellow victim are understandable.

A rug pull occurs when a crypto or NFT project shuts down unexpectedly and the value of its token or NFT plummets. Rug tugs are almost often confirmations of a con.

Arthur appears to have misplaced 78 different NFTs from five different collections, the majority of which are Azukis. 68 Wrapped Ether (WETH), 4,349 Staked DYDX (stkDYDX), and 1,578 LooksRare (LOOKS) tokens were also taken from him.

At around 12:30 a.m. UTC, the hacker began moving assets, then promptly put all of the NFTs up for bid on the OpenSea NFT marketplace. The hacker’s wallet held 545 ETH valued around $1.6 million at the time of writing.

Because even those in the top echelons of the sector can be attacked, this breach emphasizes the significance of operational security when dealing with the self-custody of crypto assets. Arthur, for one, is perplexed as to how this happened to him, writing in a tweet, “Hot wallet on mobile phone is clearly not safe enough.”

Arthur may not have been protected from this attack if he had utilized a hardware wallet, often known as a cold wallet. A hardware wallet, unlike a hot wallet, is not always linked to the internet. It also protects one’s private key and seed phrase from prying eyes. However, Arthur believes the security issue occurred as a result of an on-chain transaction that could have compromised a hardware wallet.

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