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Binance Leads Investors’ Contribution to Bail Out Victims of $615 Million Digital Coin Heist

Binance Leads Investors’ Contribution to Bail Out Victims of $615-Million Digital Coin Heist

Sky Mavis said last week it had been hit by one of the largest crypto heists on record.

By Reuters | Updated: 6 April 2022 17:37 IST

Binance Leads Investors’ Contribution to Bail Out Victims of $615-Million Digital Coin Heist

Sky Mavis to reimburse lost money partly through $150 million raised by investors

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Highlights

Sky Mavis network will reopen after a security upgrade
It will use its balance sheet funds to reimburse lost money
Hacks have plagued the $2.1 trillion crypto sector

Crypto exchange Binance is leading investors' contribution to a bailout of victims of a $615 million (roughly Rs. 4,664 crore) digital coin theft, the company targeted in the heist said on Wednesday.

The Vietnam-based company Sky Mavis, which runs the game Axie Infinity, said last week it had been hit by one of the largest crypto heists on record, leaving users unable to withdraw their money from the game.

Sky Mavis said it would reimburse the lost money through a combination of its own balance sheet funds and $150 million (roughly Rs. 1,137 crore) raised by investors including cryptocurrency exchange Binance and venture capital firm a16z.

"Sky Mavis is committed to reimbursing all of our users' lost funds and implementing rigorous internal security measures to prevent future attacks," said Trung Nguyen, CEO of Sky Mavis.

The part of the network which was hacked, a blockchain "bridge" called Ronin, which allows users to move funds in and out of the game, will reopen after a security upgrade and audits which "can take several weeks", Sky Mavis said.

The "funding round" will allow users to withdraw and deposit their money, the company said.

Binance CEO Changpeng Zhao said "we strongly believe Sky Mavis will bring a lot of value and growth for the larger industry and we believe it's necessary to support them as they work hard to resolve the recent incident."

Binance and Sky Mavis did not put a figure on how much of the $150 million (roughly Rs. 1,137 crore) Binance would provide.

Sky Mavis's game, Axie Infinity, allows its 2.2 million players to buy and trade in-game assets in the form of NFTs, which they compete against each other to earn crypto tokens.

"While racing for mainstream adoption, we made some trade-offs that ended up leaving us vulnerable to this sort of attack," a blog post on the Axie Infinity website announcing the fundraise said. "It's a lesson that we've learned the hard way."

Hacks have long plagued the $2.1 trillion (roughly Rs. 1,59,25,600 crore) crypto sector, which saw an influx of investment during the COVID-19 pandemic.

In February, a crypto platform called Wormhole lost $320 million (roughly Rs. 2,425 crore) in what was one of the largest crypto heists on record at the time. The cryptocurrency arm of Jump Trading, which had recently acquired Wormhole's developer, provided funds to replace the stolen money.

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