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Hackers stole $600 million in crypto and are having trouble laundering it

Hackers managed to penetrate the Ronin Network and stole more than half a billion worth of crypto from the Ethereum-linked sidechain developed by Sky Mavis called Axie Infinity. The online video game uses Ethereum-based cryptocurrencies and allows players to collect NFTs, which represent digital pets known as Axies. The security breach at Ronin Network is one of the largest cryptocurrency heists on record ever. According to Ronin Network, on March 23rd, 2022, approximately 173,600 Ethereum and 25.5M USDC were drained by cybercriminals. The stolen funds are worth roughly $600 million.

The attacker used “hacked private keys” to make its way into the network and stole all the funds in two transactions leaving tens of thousands of players in limbo. Earlier this month, Sky Mavis announced that they have secured funding for about a quarter of the stolen funds and will begin working on reimbursing all of the users affected by the data breach of the blockchain powering the NFT game Axie Infinity. In the meantime, hackers have been looking for ways to launder the stolen virtual money, which is apparently not an easy task.

When cryptocurrencies initially appeared on the horizon, everyone thought that virtual transactions and wallets were anonymous, but as the blockchain evolved and got mainstream, more and more people realized that transactions are not anonymous. The US government has been working on regulating crypto exchanges for years and laundering through crypto has proven to be a pain for the hackers responsible for this heist too. Other countries have followed suit and have ramped up law-enforcement efforts to seize stolen funds and limit money laundering.

Wall Street Journal reported that the thieves responsible for the hack have minimal options for laundering the funds. The ownership of the crypto addresses holding the stolen funds is unclear, but blockchain analysts have been observing tens of millions of dollars worth of stolen crypto move to virtual money exchanges located in the Bahamas and Seychelles.

Trading in Axie Infinity was frozen until company representatives assessed the damages caused by the cyber-attack. However, the company says that they are here to stay and are working on resuming operations. Even though the investigation continues, the game company is confident that this was an external breach as all of the evidence they’ve collected so far confirms that the attack was socially engineered rather than a technical flaw.

The Ronin Network bridge is expected to open once it has undergone a security upgrade and several audits, which according to the network representative, take several weeks. While things appear to be under control, with company partners reimbursing players, the hack has put a shadow on the industry. It has undoubtedly made investors and players skeptical of NFT and play-to-earn games. The NFTs in such games have both virtual and real-world value and, as such, are targets for cyber thieves.