Kronos Research loses $25M in security breach

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Taiwan’s Kronos Research announced Saturday that it had suffered a security breach that resulted in approximately $26 million in crypto losses.

Kronos revealed that the breach had occurred due to unauthorized access to its Application Programming Interface (API) keys. As a result, the company suspended all trading activities for a comprehensive investigation.

“Around 4 hours ago, we experienced unauthorized access of some of our API keys. We paused all trading while we conduct an investigation. Potential losses are not a significant portion of our equity and we aim to resume trading as soon as possible,” said Kronos.

Blockchain investigator ZachXBT discovered that approximately $25 million had been transferred into six different crypto wallet addresses. The investigation revealed six transactions from a Kronos Research account, transferring 2,780 Ether (ETH), 2,540 ETH, 2,540 ETH, 2,636 ETH, 4.93 ETH, and 2,507.52 ETH to different addresses belonging to the hacker.

ZachXBT detailed this incident using a fund outflow map, saying, “Looks possibly like $20.3M+ (12800+ ETH).”

“At present, we can confirm that the losses are about $26 million in crypto assets, and despite it being a sizable amount, Kronos remains in good standing. All losses will be covered internally, no partners will be affected,” said Kronos.

In its initial announcement, Kronos said that the potential losses were not a substantial part of its equity. In its latest update, the trading firm assured that it would internally cover all losses.

Kronos has not outlined its resumption process yet but expressed intentions to resume trading promptly.

“We’re prioritizing our resources to resume servicing the exchanges and token projects we provide liquidity for. This is the first time since 2018 we’ve halted trading, and we are confident we will bounce back stronger than ever,” Kronos said.

The $26 million attack marks the third-largest crypto theft in November 2023. Before this incident, Certik, a blockchain security firm, reported approximately $173 million lost to crypto attacks in November. Poloniex also experienced a similar hack, losing $113 million.

Kronos incident affects trading platform WOO X

The Kronos security breach affected Woo Network, a trading platform that is heavily reliant on Kronos as its primary liquidity provider.

“Since Kronos Research is the primary liquidity provider for spot markets and around 40% for perpetual futures, we have temporarily paused trading across WOO X to protect users positions from a lack of liquidity,” said WOO X in a social media post.

WOO X assured users that their funds were safe but temporarily halted specific asset pairs due to a liquidity gap caused by Kronos’s trading suspension. The platform has now resumed spot and perpetual trading as well as asset withdrawals.

“To allow our clients to manage their positions, we are working with our other MMs to resume perp trading for major assets, hopefully within the hour. Smaller altcoin perp pairs, spot trading and wallet service will be prioritized afterwards. We will provide full updates as they come,” WOO X said.

Woo Network also faced a distributed denial-of-service (DDoS) attack on its homepage. To prevent future disruptions, they are optimizing CloudFlare. Users facing issues are encouraged to submit tickets on the platform’s website for help.

BeInCrypto’s data show that the exchange’s WOO token value dropped approximately six percent, to $0.235, following the attack.