Early Tuesday morning, DeFiance founder Arthur Cheong lost close to $1.7 million from his crypto wallet. The loss consisted of the following coins; five CloneXs, 17 Azuki’s, 33 Second Selfs, two Hedgies, and two Tsubasa NFTs. This information is according to PeckShield. The firm confirms that 59 NFTs were stolen in total.
After the incident, Cheong tweets the following statement” “Well, this hit me hard, but if I got exploited as a fairly sophisticated 5 years crypto user (Defi user, password manager, mostly hardware wallet), I’m not sure how I can persuade most normal people to put a substantial part of their net worth on-chain anymore”.
The DeFiance founder believes the theft was through the use of his private key. It was via a spear-phishing email from one of DeFiance Capital’s portfolio firms. After opening the file, the attacker reportedly acquired access to the private key of one of Cheong’s hot wallets. Once he got access to the hot wallet and his private key the deed was done, and the DeFiance founder lost his $1.7 million.
A crypto tracking service called Etherscan has named the crypto address “Arthurox Wallet Hacker,” and it currently holds more than 585 Ethereum.
A “hot wallet” needs a connection to the internet to function. On the other hand, a “cold wallet” does not use the internet. Instead, they are paper wallets and hardware wallets. They are physical devices, and they usually work through a USB stick. We wouldn’t say that they are hackproof, but their security is at a better level than that of a hot wallet.
Once the DeFiance founder lost his assets, he added that he” “was pretty careful and stuck with only using hardware wallet on PC until I start trading NFT more regularly.”
It doesn’t necessarily come as a surprise as many brands have joined the bandwagon. Even an expert and experienced trader can lose $1.7 million in this incident. Traders and investors should still be cautious and work with what they are familiar with, not with what is the new craze at that moment.