$14.1 Million Disappears from Crypto Exchange Rain in Suspicious Outflows

On April 29, the Bahrain-based Rain cryptocurrency exchange experienced a significant security breach involving the unauthorized transfer of $14.1 million in cryptocurrencies, including Bitcoin, Ether, Solana, and Ripple, to a previously unknown wallet. This incident was first detailed in a May 13 analysis by on-chain investigator ZachXBT. 

Investigation Reveals Movement of Stolen Funds From Crypto Exchange Rain

The illicit activity occurred two weeks prior to the report’s publication, with the transferred funds swiftly exchanged and relocated to distinct Bitcoin and Ethereum addresses. Crypto exchange Rain operates as a centralized exchange and has become a pivotal player in the cryptocurrency market of Southwest Asia and the Middle East. Since its establishment, the exchange has facilitated over $1 billion in trading volume, according to the regional publication, The National. Despite its prominence, the platform fell victim to an intricate exploit that began with the redirection of assets to instant exchanges where they were converted into Bitcoin and Ether.

Further investigations revealed that the Ethereum address implicated in the incident, which concludes with the digits 6c28, currently holds about 1,881 ETH, valued approximately at $5.5 million. Meanwhile, the associated Bitcoin address, ending in prp2, contains around 137.9 BTC, or $8.6 million. Data from Arkham Intelligence indicated that the Ethereum address in question received these funds from another address ending in d609. This latter address was a recipient of several transactions from Bitgo multisignature wallets, although it has not been definitively linked to Rain by Arkham.

The flow of funds on April 29 was notable, with the Bitgo wallets executing 26 separate transactions. These transactions comprised a mix of ETH and various tokens including Shiba Inu, Chainlink, Tether, and USD Coin, totaling significant sums. For instance, over 590 ETH and about 20 billion Shiba Inu tokens were among the assets transferred. Subsequently, these were quickly exchanged for ETH using the Uniswap platform. During this flurry of activity, the d609 address continued to accumulate additional tokens from Bitgo, receiving assets such as Aave, Yearn Finance, MakerDAO, and others. Additionally, there was an influx of funds into the account from a Binance hot wallet, further complicating the trail of digital assets. 

We wanted to take some time today to clarify a security incident that we haven't been able to fully comment on yet, due to an ongoing investigation.

At the time of the incident, we acted swiftly, we protected our customers, and we upheld our commitment to keep customer funds…

— Joseph Dallago (@_jayd3e) May 13, 2024

Crypto Industry Faces Broader Security Concerns 

This breach forms part of a broader pattern of security challenges within the crypto industry. Just a week after the incident at the crypto exchange Rain, the AI-based platform Gnus.AI suffered a loss exceeding $1.27 million when its Discord server was compromised, resulting in the exposure of a private key. Adding to the sector’s vulnerabilities, cybersecurity firm Kaspersky disclosed on May 13 that Kimsuky, a North Korean hacker group, has been deploying a new malware named “Durian,” targeting cryptocurrency firms specifically.

In addition to the April 29 security breach at Rain, the cryptocurrency industry has witnessed several other significant hacking incidents recently, highlighting an ongoing vulnerability across the sector. Among these, Prism Finance suffered a severe attack on March 28, 2024, resulting in the theft of approximately $10 million. This event echoes the sector’s susceptibility, particularly among DeFi platforms.

Similarly, Mozaic Finance on the Arbitrum chain experienced a breach on March 15, 2024, where $2.5 million was stolen through exploited contracts, further underscoring the security challenges faced by blockchain technologies.

In a more alarming development, the cryptocurrency exchange BitForex abruptly ceased operations on February 23, 2024, after withdrawing nearly $57 million from its hot wallets. This sudden disappearance has left numerous users without access to their funds, intensifying concerns about the regulatory oversight of cryptocurrency platforms in jurisdictions like Hong Kong. 

Signs of Improvement Despite Ongoing Challenges

Despite these ongoing security challenges, there is a silver lining. According to a recent report by Chainalysis, there has been a notable decrease in cryptocurrency-related frauds and hacks compared to the previous year. Specifically, the total value received by illicit cryptocurrency addresses in 2023 amounted to $24.2 billion, a significant reduction from the $39.6 billion recorded in 2022. This decline suggests that the measures implemented to enhance security and combat fraud in the digital currency space are having a positive impact. 

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